Baxter Invested $50,000 in an Activity in 2013 $\begin{array}{rr}\text { Year }&\text { Gain(Loss) }\\2015 & (\$ 25,000 \\2016 & 10,000 \\2017 & 10,000\end{array}$

question 21

Multiple Choice

Baxter invested $50,000 in an activity in 2013.At the beginning of 2015,Baxter's at-risk amount was $10,000.Baxter's share of losses from the activity were as follows: $\begin{array}{rr}\text { Year }&\text { Gain(Loss) }\\2015 & (\$ 25,000 \\2016 & 10,000 \\2017 & 10,000\end{array}$ If you ignore the passive loss rules,how much income/loss will Baxter have from the activity in 2017?

• A)$0.
• B)$5,000.
• C)$10,000.
• D)$15,000.

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Definitions:

Inventory

Materials and products that a business holds for the ultimate purpose of resale.

Investment Account

An account held at a financial institution or brokerage which is used for the buying of investments such as stocks, bonds, and mutual funds.

Book Value

The net value of a company's assets minus its liabilities, as recorded on the balance sheet.

Underlying

In finance, the asset or instrument upon which a derivative or other financial contract is based.