If a Taxpayer Sells a Passive Activity with Suspended Passive

question 68

Multiple Choice

If a taxpayer sells a passive activity with suspended passive activity losses from prior years, what type of income can generally be offset by the suspended passive losses in the year of sale?

• A)Passive activity income
• B)Portfolio income
• C)Active business income
• D)Any of these types of income can be offset
• E)None of the choices are correct. The suspended losses disappear when the passive activity is sold.

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Definitions:

Two-Person Single Career

A spouse participates in the other’s career behind the scenes without pay or direct recognition.

Division of Labor

The allocation of different tasks, roles, or responsibilities among members of a group or society, often based on factors like expertise or gender.

Personal Assistant

An individual employed to aid with daily administrative or personal tasks for another person, often within a professional or personal setting.

Two-Income Parents

Households where both parents are earners, contributing financially to the family's income.