Which of the Following Is a Passive Activity

question 41

Multiple Choice

Which of the following is a passive activity?

• A)A limited partnership interest.
• B)Rental real estate activities where the owner is a real estate professional and works 800 hours per year.
• C)A trade or business in which the taxpayer materially participates.
• D)All of these.

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Definitions:

Variable Cost

Expenses that adjust in direct correlation with changes in production or sales levels.

Fixed Costs

Expenses that do not change with the level of production or sales activities within a certain range, such as rent, salary, insurance, and loan payments.

Break-even Point

The break-even point is the level of production or sales at which total revenues equal total costs, resulting in no net profit or loss.

Variable Cost

A variable cost changes in proportion to the level of production or business activity, such as raw materials or direct labor expenses.