In 2012, Amber Had a $100,000 Loss on a Passive

question 111

Multiple Choice

In 2012, Amber had a $100,000 loss on a passive activity.None of the loss is attributable to AMT adjustments or preferences.She has no other passive activities.Which of the following statements is correct?

• A)In 2012, Amber can deduct $100,000 for regular income tax purposes and for AMT purposes.
• B)Amber will have a $100,000 tax preference in 2012 as a result of the passive activity.
• C)For regular income tax purposes, none of the loss is allowed in 2012.
• D)In 2012, Amber will have a positive adjustment of $25,000 as a result of the passive loss.
• E)None of the above.

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Definitions:

Revenue and Spending Variance

The difference between the expected (budgeted) and actual amounts of revenue and expenses.

Flexible Budget Performance Report

A financial report that compares actual operating results to budgeted amounts adjusted for actual activity levels.

Activity Variance

The difference between the planned budget of an activity and the actual expenses incurred.

Net Operating Income

The earnings derived from the primary activities of a business before the subtraction of any taxes and interest charges.