If a Taxpayer Has the Following for the Current Year

question 51

Multiple Choice

If a taxpayer has the following for the current year:
$\begin{array}{c}\begin{array}{lll}& \text { Active}\\&\underline { \text { Income }}\\\text { Income } &\$ 75,000 \\\text { Deductions } &\underline{(45,000) }\\\text { Income(Loss) } &\underline{\$ 30,000}\end{array}\begin{array}{lll} \text { Portfolio}\\\underline { \text { Income }}\\\$ 22,000 \\\underline {(16,000) }\\\underline{\$ 6,000}\end{array}\begin{array}{lll} \text { Passive}\\\underline { \text { Income }}\\\$ 55,000 \\\underline {(110,000) }\\\underline{\$(55,000) }\end{array}\end{array}$
I.If the taxpayer is a regular corporation,taxable income from the three activities is a loss of $19,000.
II.If the taxpayer is an individual and the passive income is related to a rental real estate activity in which the taxpayer is an active participant,taxable income is $11,000.

• A)Only statement I is correct.
• B)Only statement II is correct.
• C)Both statements are correct.
• D)Neither statement is correct.

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Definitions:

Cognitive Processes

Mental activities involved in acquiring knowledge and understanding through thought, experience, and the senses.

Individuality Corollary

A concept in George Kelly's personal construct theory, highlighting how people have unique perceptions and interpretations based on their personal experiences.

Predictive Efficiency

The degree to which a model, tool, or method can accurately forecast outcomes or behaviors.

Construct System

A psychological framework comprising an individual's core beliefs and values that guides perceptions and interpretations of the world.