During the Current Year, Ethan Performs Personal Services as Follows

question 43

Multiple Choice

During the current year, Ethan performs personal services as follows: 800 hours in his information technology consulting practice, 625 hours in a real estate development business, and 510 hours in a condominium leasing operation. He expects that losses will be realized from the two real estate ventures while his consulting practice will show a profit. Ethan files a joint return with his wife whose salary is $125,000. The income and losses from the following ventures is considered active and not subject to the passive activity loss limitations:

• A)Only the information technology consulting practice.
• B)Only the information technology consulting practice and the real estate development business.
• C)Only the information technology consulting practice and the condominium leasing operation.
• D)All three of the ventures are considered active and not subject to the passive activity loss limitations.
• E)None of the above.

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Definitions:

Monetary Policy

The process by which a central bank controls the supply of money in the economy, primarily through interest rates.

Federal Reserve District Banks

The 12 regional banks in the Federal Reserve System, each serving a specific geographic area of the United States, responsible for implementing the country's monetary policies.

Recessions

A phase of limited economic decrease, with trade and industry activity lowering, usually identified by a decrease in GDP in two adjacent quarters.

Federal Reserve Notes

Paper money issued by the Federal Reserve, the central banking system of the United States, used as the country's standard currency.