Darien Owns a Passive Activity That Has a Basis of $36,000

question 107

Multiple Choice

Darien owns a passive activity that has a basis of $36,000 and a suspended loss of $22,000. If Darien dies during the year when the passive activity has a fair market value of $52,000, how will the information be presented on his tax return?
I.Darien will report an ordinary loss of $6,000.
II.Darien will report a capital gain of $16,000.
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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:

Charges for Services

The costs associated with healthcare services, procedures, and treatments that are billed to patients or insurance companies.

Accounts Receivable

Represents the money owed to a company by its customers for goods or services that have been delivered or used but not yet paid for.

Ethnolinguistic Vitality

The degree to which a cultural or ethnic group is able to maintain and use its language and culture in the presence of other dominant groups.

Immigrants

Individuals who move from one country to another with the intention of settling in the new country.