In 2011,Glenda Had a $97,000 Loss on a Passive Activity

question 96

Multiple Choice

In 2011,Glenda had a $97,000 loss on a passive activity.None of the loss is attributable to AMT adjustments or preferences.She has no other passive activities.Which of the following statements is correct?

• A) In 2011, Glenda can deduct $97,000 for regular income tax purposes and for AMT purposes.
• B) Glenda will have a $97,000 tax preference in 2011 as a result of the passive activity.
• C) For regular income tax purposes, none of the loss is allowed in 2011.
• D) In 2011, Glenda will have a positive adjustment of $25,000 as a result of the passive loss.
• E) None of the above.

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Definitions:

Soybeans

A type of legume native to East Asia, widely grown for its edible bean used in a variety of foods and products.

Short-Run Profit

Profits earned by a firm in a period where at least one input is fixed, reflecting immediate financial performance.

Shut Down

A short-term decision by a firm to cease production due to market conditions, often when the revenue from sales cannot cover variable costs.

Total Cost

The total of all expenses related to the manufacturing of products or provision of services, which encompasses both constant and fluctuating costs.