What Can You Do If Your Budget Shows an Annual

question 79

Multiple Choice

What can you do if your budget shows an annual budget deficit?

• A)You can liquidate investments to meet the total budget shortfall for the year.
• B)You can increase low-priority expenses on the budget.
• C)You can invest more in real estate/personal estate.
• D)You can discourage borrowing.
• E)You can shift expenses from the surplus months to the deficit months.

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Definitions:

Form 6198

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

At-Risk Amounts

At-Risk Amounts refer to the amount of money an individual could lose in an investment or venture, indicating the level of risk involved in the investment.

At-Risk Amount

The maximum amount of money or other assets that a taxpayer can claim as a deduction or loss from an activity, to the extent of the actual economic risk.

Material Participation Activities

Activities in which taxpayers are involved on a regular, continuous, and substantial basis in business operations.