During the Current Year,Ethan Performs Personal Services as Follows: 800

question 80

Multiple Choice

During the current year,Ethan performs personal services as follows: 800 hours in his information technology consulting practice,625 hours in a real estate development business,and 510 hours in a condominium leasing operation.He expects that losses will be realized from the two real estate ventures while his consulting practice will show a profit.Ethan files a joint return with his wife whose salary is $125,000.The income and losses from the following ventures is considered active and not subject to the passive loss limitations:

• A)Only the information technology consulting practice.
• B)Only the information technology consulting practice and the real estate development business.
• C)Only the information technology consulting practice and the condominium leasing operation.
• D)All three of the ventures are considered active and not subject to the passive loss limitations.
• E)None of these.

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Definitions:

Profitability

The ability of a business to earn a profit, determined by its revenue exceeding its costs and expenses over a specific period.

Solvency

The ability of an entity to meet its long-term financial obligations.

Long-term Ability

The potential of an entity or individual to sustain performance or activity over an extended period.

Cash

Currency or funds that a company has in bank accounts and physical money on hand, readily available for use.