Paula Owns Four Separate Activities

question 33

Multiple Choice

Paula owns four separate activities. She elects not to group them together as a single activity under the "appropriate economic unit" standard. Paula participates for 130 hours in Activity A, 115 hours in Activity B, 260 hours in Activity C, and 100 hours in Activity D. She has one employee, who works 125 hours in Activity D. Which of the following statements is correct?

• A) Activities A, B, C, and D are all significant participation activities.
• B) Paula is a material participant with respect to Activities A, B, C, and D.
• C) Paula is not a material participant with respect to Activities A, B, C, and D.
• D) Losses from all of the activities can be used to offset Paula's active income.
• E) None of the above.

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Definitions:

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The return on investment for Treasury bills, which are short-term government securities.

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The time between when a payment is issued by a company and when the funds are actually withdrawn from the company's bank account.

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The average amount is the sum of figures divided by the number of figures, used to find the central or typical value in a set of data.

Cheques Clear

The process by which a bank verifies the funds available in the account of the check issuer and transfers the specified amount to the recipient's account.