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Sarah Owns a Passive Activity That Has a Suspended Loss

question 57

Multiple Choice

Sarah owns a passive activity that has a suspended loss of $18,000. The activity has a fair market value of $35,000 and her adjusted basis in the activity is $20,000.
I.If Sarah sells the activity, she is allowed to deduct the $18,000 suspended loss.
II.If Sarah gifts the activity, she is only be allowed to deduct $15,000 of the suspended loss.


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