Skeeter Invests in Vacant Land for the Purpose of Realizing

question 38

Multiple Choice

Skeeter invests in vacant land for the purpose of realizing a profit on its appreciation.He leases the land during the period he holds it.The unadjusted basis of the property is $75,000 and its fair market value is $105,000.The lease payments are $1,200 per year.

• A)The leasing activity will be treated as a rental activity and will be treated as a passive activity regardless of how many hours Skeeter participates.
• B)The leasing activity will be treated as a rental activity and will not be treated as a passive activity if Skeeter qualifies as a real estate professional.
• C)The leasing activity will not be treated as a rental activity.
• D)The leasing activity will be treated as a rental activity and will not be treated as a passive activity if Skeeter devotes more than 500 hours to the activity.
• E)None of the above.

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Definitions:

Flextime

A program that allows employees to choose their starting and ending times, provided that they are at work during a specified core period.

Preferred Time

A designated or chosen period that is seen as most suitable or desirable for a specific purpose or activity.