Darien Owns a Passive Activity That Has a Basis of $36,000

question 107

Multiple Choice

Darien owns a passive activity that has a basis of $36,000 and a suspended loss of $22,000. If Darien dies during the year when the passive activity has a fair market value of $52,000, how will the information be presented on his tax return?
I.Darien will report an ordinary loss of $6,000.
II.Darien will report a capital gain of $16,000.
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• A)Only statement I is correct.
• B)Only statement II is correct.
• C)Both statements are correct.
• D)Neither statement is correct.

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Definitions:

Disease of Addiction

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Narcotics Anonymous

A global, community-based organization of recovering drug addicts with regular meetings aimed at helping members stay sober.

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Rational Recovery

A self-help recovery method for individuals with substance abuse issues, emphasizing personal responsibility and cognitive-behavioral techniques.