Lucy Dies Owning a Passive Activity with an Adjusted Basis

question 52

Multiple Choice

Lucy dies owning a passive activity with an adjusted basis of $90,000.Its fair market value at that date is $145,000.Suspended losses relating to the property were $75,000.Which of the following statements is true?

• A)The heir's adjusted basis is $145,000, and Lucy's final deduction is $20,000.
• B)The heir's adjusted basis is $145,000, and Lucy's final deduction is $75,000.
• C)The heir's adjusted basis is $90,000, and Lucy's final deduction is $75,000.
• D)The heir's adjusted basis is $220,000, and Lucy has no final deduction.
• E)None of the above.

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Definitions:

Art Imitates Life

A concept suggesting that creative works reflect or represent the reality of human experiences and the world around us.

Story

A narrative account of a series of events, real or imagined, designed to interest, entertain, or convey a message.

Life as an Investment

The perspective that views the allocation of time, energy, and resources in one's life with an expectation of achieving beneficial returns, similar to financial investments.

John Barth

An American novelist known for his postmodernist and metafictional techniques, exploring the nature of narrative and the author-reader relationship.