Samantha Sells a Passive Activity (Adjusted Basis of $50,000) for $90,000.Suspended

question 48

Multiple Choice

Samantha sells a passive activity (adjusted basis of $50,000) for $90,000.Suspended losses attributable to this property total $30,000.The realized gain and the taxable gain are:

• A)$40,000 realized gain; $70,000 taxable gain.
• B)$10,000 realized gain; $10,000 taxable gain.
• C)$40,000 realized gain; $0 taxable gain.
• D)$40,000 realized gain; $10,000 taxable gain.
• E)None of the above.

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Definitions:

Nonexcludable

A characteristic of a good or service where it is impossible, or highly costly, to prevent someone from using it once it has been provided.

Nonrival

A characteristic of a good where one person's consumption does not diminish the utility or availability of that good for others.

Marginal Cost

The cost added by producing one additional unit of a product or service, a critical concept in economic theory for optimal production levels.

Public Goods

Goods that are non-excludable and non-rivalry in consumption, meaning they are available to all members of society and one person's use does not diminish another's.