Vic's At-Risk Amount in a Passive Activity Is $200,000 at the Beginning

question 76

Multiple Choice

Vic's at-risk amount in a passive activity is $200,000 at the beginning of the current year.His current loss from the activity is $80,000.Vic had no passive activity income during the year.At the end of the current year:

• A)Vic has an at-risk amount in the activity of $120,000 and a suspended passive loss of $80,000.
• B)Vic has an at-risk amount in the activity of $200,000 and a suspended passive loss of $80,000.
• C)Vic has an at-risk amount in the activity of $120,000 and no suspended passive loss.
• D)Vic has an at-risk amount in the activity of $200,000 and no suspended passive loss.
• E)None of the above.

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Definitions:

Fixed Costs

Fixed costs are business expenses that remain constant regardless of the level of production or sales activities.

Contribution Margin

The difference between a company's sales revenue and its variable costs, used to cover fixed costs and generate profit.

Variable Cost

A corporate expense that changes in proportion with production output, such as raw materials and labor costs, differing from fixed costs.

Operating Cash Flow

The cash generated from the normal operations of a business, excluding financing and investing activities.