When Downsizing Is Done Appropriately to Create a More Agile

question 125

Multiple Choice

When downsizing is done appropriately to create a more agile, flexible, and responsive firm, it is known as

• A) Undersizing.
• B) Streamlining.
• C) Realigning.
• D) Minimizing.
• E) Rightsizing.

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Definitions:

Passive Activity

Economic activities in which the taxpayer does not materially participate, like rental property, often with distinct tax rules.

Suspended Passive Losses

Losses from passive activities that exceed income from passive activities, which cannot be deducted in the current year and must be carried forward to future tax years.

At-Risk

The at-risk rules limit the amount of loss a taxpayer can claim to the amount actually at risk in the investment activity.

Form 6198

An IRS form used by taxpayers to determine the amount of at-risk activities loss that is deductible for the tax year.