Identify from the List Below the Type of Disposition of a Passive

question 40

Multiple Choice

Identify from the list below the type of disposition of a passive activity where the taxpayer keeps the suspended losses of the disposed activity and utilizes them on a subsequent taxable disposition.

• A)Disposition of a passive activity by gift.
• B)Nontaxable exchange of a passive activity.
• C)Disposition of a passive activity at death.
• D)Installment sale of a passive activity.
• E)None of the above.

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Definitions:

Cost of Acquisition

The total of all expenses incurred to acquire an asset or business, including the purchase price and related costs.

Impairment Loss

The reduction in the recoverable value of an asset or cash-generating unit below its carrying value.

Pre-Acquisition Profits

Earnings of a subsidiary before control was taken by the parent company; these are not included in the consolidated profit and loss of the parent company.