In 2015,Glenn Had a $108,000 Loss on a Passive Activity

question 74

Multiple Choice

In 2015,Glenn had a $108,000 loss on a passive activity.None of the loss is attributable to AMT adjustments or preferences.She has no other passive activities.Which of the following statements is correct?

• A)In 2015,Glenn can deduct $108,000 for regular income tax purposes and for AMT purposes.
• B)Glenn will have a $108,000 tax preference in 2015 as a result of the passive activity.
• C)For regular income tax purposes,none of the loss is allowed in 2015.
• D)In 2015,Glenn will have a positive adjustment of $25,000 as a result of the passive loss.
• E)None of the above.

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Definitions:

Consolidation

Consolidation is the process of combining the financial statements of a parent company and its subsidiaries into a single, comprehensive set of statements.

Outstanding Common Stock

Shares of a company's common stock that have been issued and are in the hands of investors, including those held by the public and company insiders but excluding treasury shares.

Annual Amortization

The procedure of methodically deducting the starting cost of an intangible asset throughout its period of utility.

Retained Earnings

The portion of net profits not distributed to shareholders but reinvested in the business or kept as reserve.