If a Loss Is Disallowed Under Passive Loss Rules, the Loss

question 19

Multiple Choice

If a loss is disallowed under passive loss rules, the loss is:

• A) Lost forever.
• B) Carried over indefinitely and deductible when passive income is generated.
• C) Carried over indefinitely and deductible when the activity is disposed of.
• D)Both Carried over indefinitely and deductible when passive income is generated and Carried over indefinitely and deductible when the activity is disposed of.

---

Definitions:

Drug Transactions

These are exchanges that involve the buying and selling of illegal substances or prescription medications without proper authorization.

Price Controls

Government-imposed limits on the prices that can be charged for goods and services in the market.

Misallocation

The inefficient or inappropriate distribution of resources in a manner that does not maximize economic efficiency or output.

Production Cost

The total expense incurred in the manufacture of a product, including raw materials, labor, and overhead costs.