Pat Sells a Passive Activity for $100,000 That Has an Adjusted

question 35

Essay

Pat sells a passive activity for $100,000 that has an adjusted basis of $55,000. During the years of her ownership,
$60,000 of losses have been incurred that were suspended under the passive activity loss rules. In addition, the passive activity generated tax credits of $10,000 that were not utilized and suspended. Determine the tax treatment to Pat on the disposition of the property.

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Definitions:

Stereotype Threat

The risk of confirming negative stereotypes about an individual's racial, ethnic, gender, or cultural group which can impair performance.

Negative Stereotype

A fixed, overgeneralized belief about a particular group or class of people that is unfavorable or harmful.

Out-Group

A social group toward which an individual feels a sense of competition or opposition, as opposed to an "in-group," which elicits feelings of loyalty and belonging.

Equal Pay Act

A labor law that prohibits gender-based wage discrimination, mandating equal pay for equal work performed by men and women.