If a Taxpayer Sells a Passive Activity with Suspended Passive

question 51

Multiple Choice

If a taxpayer sells a passive activity with suspended passive activity losses from prior years, what type of income can be offset by the suspended passive losses in the year of sale?

• A) Passive activity income
• B) Portfolio income
• C) Active business income
• D) Any of these types of income can be offset.
• E) None of these. The suspended losses disappear when the passive activity is sold.

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Definitions:

Encoding Specificity Principle

The theory that memory is improved when information available at encoding is also present at retrieval.

Sensory Store

A very short-term form of memory that allows individuals to retain impressions of sensory information after the original stimuli have ended.

Retrieval Cue

A trigger or stimulus that aids the recall of information from memory.

Long-Term Memory

The phase of memory responsible for the storage of information over extended periods, potentially as long as a lifetime.