Jenny Spends 32 Hours a Week, 50 Weeks a Year

question 47

Multiple Choice

Jenny spends 32 hours a week, 50 weeks a year, operating a bicycle rental store that she owns at a resort community.She also owns a music store in another city that is operated by a full-time employee.Jenny spends 140 hours per year working at the music store.She elects not to group them together as a single activity under the "appropriate economic unit" standard.

• A)Neither store is a passive activity.
• B)Both stores are passive activities.
• C)Only the bicycle rental store is a passive activity.
• D)Only the music store is a passive activity.
• E)None of these is correct.

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Definitions:

Corporation

A legal entity that is separate and distinct from its owners, which can own assets, incur liabilities, and be sued or sue.

Advantages

Advantages are benefits or favorable factors that contribute to the success and competitiveness of a business or strategy.

Disadvantages

The negative or less favorable aspects of a situation, decision, or item.

Treasury Stock

Shares bought back by the issuing company, reducing the amount of outstanding stock on the open market.