Paula Owns Four Separate Activities

question 33

Multiple Choice

Paula owns four separate activities. She elects not to group them together as a single activity under the "appropriate economic unit" standard. Paula participates for 130 hours in Activity A, 115 hours in Activity B, 260 hours in Activity C, and 100 hours in Activity D. She has one employee, who works 125 hours in Activity D. Which of the following statements is correct?

• A) Activities A, B, C, and D are all significant participation activities.
• B) Paula is a material participant with respect to Activities A, B, C, and D.
• C) Paula is not a material participant with respect to Activities A, B, C, and D.
• D) Losses from all of the activities can be used to offset Paula's active income.
• E) None of the above.

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Definitions:

Mantle

The layer of the Earth located between the crust and the outer core, composed of silicate rocks rich in iron and magnesium.

Gravity

The force exerted between any two objects, such as that between the Sun, Earth, and Moon; synonymous with gravitational pull.

Sun

The star at the center of our solar system, which provides light and heat essential for life on Earth.

Moon

The Earth's natural satellite, orbiting the planet and influencing various terrestrial phenomena, including tides and potentially affecting the Earth's climate.