Ferris Owns an Interest In,but Does Not Materially Participate In,an

question 53

Multiple Choice

Ferris owns an interest in,but does not materially participate in,an activity.He has $30,000 at-risk.The business produced a loss in the current year and Ferris's share of the loss is $45,000.Assuming Ferris has no passive income,how much of the $45,000 loss will be deductible by Ferris?

• A)$0.
• B)$30,000.
• C)$45,000.
• D)Cannot be determined.

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Definitions:

Natural Monopoly

A market condition where a single company can provide goods or services at a lower cost than any potential competitor, leading to a monopoly due to natural market forces.

Positive Externality

A benefit that affects a party who did not choose to incur that benefit, often associated with public goods and services.

Patent Laws

Regulatory legal frameworks designed to protect the rights of inventors by giving them exclusive rights to their inventions for a certain period.

Business Monopoly Power

The ability of a single company to control an entire market, limiting competition and setting prices.