Norris Owns a Passive Activity That Has a Suspended Loss

question 70

Multiple Choice

Norris owns a passive activity that has a suspended loss of $12,000. The activity has a fair market value of $42,000 and his adjusted basis in the activity is $27,000.
I.If Norris gifts the property, he is allowed to deduct $3,000 of the suspended loss.
II.If Norris dies, none of the suspended loss is deductible.
​

• 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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