During the Year, Aimee Reports $30,000 of Active Business Income

question 76

Multiple Choice

During the year, Aimee reports $30,000 of active business income, $15,000 of income from passive activity X, and a $25,000 loss from passive activity Y. Determine the tax consequences of these events.
I.The $15,000 income from activity X can offset $15,000 of the loss from activity Y.
II.Any passive loss that is not deducted in the current year is suspended.
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• A)Only statement I is correct.
• B)Only statement II is correct.
• C)Both statements are correct.
• D)Neither statement is correct.

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Definitions:

Incapacitated

Refers to the state where an individual or entity is legally unable to make their own decisions due to mental or physical disability.

Partially Disclosed

Refers to a situation where some but not all relevant information has been revealed.

Indemnification

Payment for loss or damage suffered.

Fiduciary Relationship

A relationship based on trust such as exists between an attorney and a client, an agent and a principal, a guardian and a ward, a trustee and a beneficiary, or a director and a corporation.