Caroyl Made a Gift to Tim of a Passive Activity

question 60

Multiple Choice

Caroyl made a gift to Tim of a passive activity (adjusted basis of $50,000, suspended losses of $20,000, and a fair market value of $80,000) . No gift tax resulted from the transfer.

• A) Tim's adjusted basis is $80,000, and Tim can deduct the $20,000 of suspended losses in the future.
• B) Tim's adjusted basis is $80,000.
• C) Tim's adjusted basis is $50,000, and the suspended losses are lost.
• D) Tim's adjusted basis is $50,000, and Tim can deduct the $20,000 of suspended losses in the future.
• E) None of the above.

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Definitions:

Essay Exams

A type of examination where students are required to write detailed answers in essay format to questions posed by the examiner.

Fluid Intelligence

The ability to think logically and solve problems in novel situations, independent of acquired knowledge, which can decrease with age.

Crystallized Intelligence

The ability to use knowledge, facts, and experience, often improving as one ages.

Fluid Intelligence

The capacity to think logically and solve problems in novel situations, independent of acquired knowledge.