Baird Has Four Passive Activities How Much of the $60,000 Net Passive Loss Can Baird

question 23

Essay

Baird has four passive activities.The following income and losses are generated in the current year.
$\begin{array}{lll}\text { Year }&\text { Gain (Loss) }\\\mathrm{A} & \$ (40,000)\\\mathrm{B} & \$ (15,000)\\\mathrm{C} & \$ (25,000) \\\mathrm{D} & \$ 20,000\\\text { Total }&\$(60,000)\end{array}$ How much of the $60,000 net passive loss can Baird deduct this year? Calculate the suspended losses (by activity).

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Definitions:

Contract Rate

The interest rate stated in a loan or lease agreement, dictating the rate at which interest accrues on the outstanding principal.

Bond Premium

The excess of a bond's market price over its principal amount or nominal value.

Straight-line Method

A strategy for computing depreciation or amortization through evenly apportioning the cost of an asset across its expected useful duration.

Semiannual Interest

Interest that is calculated and paid twice a year, commonly found in bonds and loans.