Consider the Following Three Statements: in Which of the Three

question 44

Multiple Choice

Consider the following three statements: In which of the three cases above could the rental activity automatically be considered a passive activity?

• A)Case 1 only.
• B)Case 2 only.
• C)Case 3 only.
• D)Cases 1, 2, and 3.
• E)None of the above.

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Definitions:

Demand Deposit

Bank accounts that allow the holder to withdraw funds without prior notice, such as a checking account.

Marketable Securities

Financial instruments that can easily be sold or converted into cash at a value close to their market rate.

Precautionary Demand

Precautionary demand refers to the desire to hold cash or easily liquidatable assets to safeguard against unexpected financial needs or market fluctuations.

Unexpected Opportunities

Situations or prospects that arise unexpectedly, offering potential benefits or advantages not initially planned for.