Vic's At-Risk Amount in a Passive Activity Is $200,000 at the Beginning

question 76

Multiple Choice

Vic's at-risk amount in a passive activity is $200,000 at the beginning of the current year.His current loss from the activity is $80,000.Vic had no passive activity income during the year.At the end of the current year:

• A)Vic has an at-risk amount in the activity of $120,000 and a suspended passive loss of $80,000.
• B)Vic has an at-risk amount in the activity of $200,000 and a suspended passive loss of $80,000.
• C)Vic has an at-risk amount in the activity of $120,000 and no suspended passive loss.
• D)Vic has an at-risk amount in the activity of $200,000 and no suspended passive loss.
• E)None of the above.

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Definitions:

Depreciation

The systematic allocation of the cost of a tangible asset over its useful life, reflecting the decrease in value over time.

Securities and Exchange Act

A U.S. law enacted in 1934 to regulate the securities industry and mandate disclosure of important financial information for publicly traded companies.

Publicly Traded Firms

Companies whose shares are available for purchase by the general public on stock exchanges.

Independent Accountants

Are professional auditors or accountants not employed by the company they are auditing, ensuring unbiased financial analysis and reporting.