Nora Acquired Passive Activity a Several Years Ago That Until

question 81

Multiple Choice

Nora acquired passive activity A several years ago that until 2011 was profitable.However, the activity produced losses of $100,000 in 2011 and $50,000 in 2012.Nora had passive income from activity B of $40,000 in 2011 and $0 in 2012.How much loss is suspended from activity A in each year?

• A)$60,000 in 2011 and $50,000 in 2012.
• B)$100,000 in 2011 and $50,000 in 2012.
• C)$0 in 2011 and $0 in 2012.
• D)None of the above.

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Definitions:

Equity Method Investments

Accounting for investments in which the investor has significant influence over the investee, recognizing proportional earnings of the investee.

Cash Dividends

Payments made by a corporation to its shareholders from its profits or reserves.

Common Stock

A type of equity security that represents ownership in a corporation, giving holders voting rights and a claim on a portion of the company's profits in the form of dividends.

Debt Securities

Financial instruments representing a loan made by an investor to a borrower, typically including bonds, notes, and bills.