Fred's At-Risk Amount in a Passive Activity Is $50,000 at the Beginning

question 22

Multiple Choice

Fred's at-risk amount in a passive activity is $50,000 at the beginning of the current year. His current loss from the activity is $60,000. He had no passive activity income during the year. At the end of the year, which of the following statements is incorrect?

• A) Fred has a loss of $50,000 suspended under the passive loss rules.
• B) Fred has an at-risk amount in the activity of $0.
• C) Fred has a loss of $10,000 suspended under the at-risk rules.
• D) Fred has a loss of $60,000 suspended under the passive loss rules.

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Definitions:

Quantity Supplied

The total amount of a specific good or service that is available to consumers at a given price point and time.

Ice Cream

A sweet, frozen dessert made from a combination of dairy products, sweeteners, and flavorings.

Inferior Good

A type of good whose demand decreases when consumer income rises, unlike normal goods, for which demand increases with income.

Quantity Demanded

The amount of a product consumers are willing and able to purchase at a given price over a specified time period.