Alex Has Three Passive Activities with At-Risk Amounts in Excess

question 53

Multiple Choice

Alex has three passive activities with at-risk amounts in excess of $100,000 for each.During the year, the activities produced the following income (losses) . Alex's suspended losses are as follows:

• A) $75,000 is allocated to C; $0 to A and B.
• B) $37,500 is allocated to A; $37,500 to B.
• C) $56,250 is allocated to A; $18,750 to B.
• D) $25,000 is allocated to A, B, and C.
• E) None of the above.

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Definitions:

Inventory Account

Inventory Account is an asset account on the balance sheet that reports the value of a company's inventory - raw materials, work-in-process, and finished goods.

Factory Overhead

Manufacturing costs that are not raw material or direct labor costs.

Raw Materials

The basic materials from which products are manufactured or made.

Corporate Headquarters

The main office or center of operations for a corporation, where key managerial and administrative activities are conducted.