Erline Begins Investing in Various Activities During the Current Year

question 6

Essay

Erline begins investing in various activities during the current year.Unfortunately,her tax advisor fails to warn her about the passive loss rules.The results of the three passive activities she purchased for the current year are:
$\begin{array}{lr}&\text { Income (Loss) } \\ \text {Passive Activity 1 } &\$(36,000) \\ \text {Passive Activity 2 } &22,000 \\ \text { Passive Activity 3 } &(4,000)\end{array}$

a If Erline's adjusted gross income is $\$ 170,000$ before considering the effect of the passive activities, what will Erline's adjusted gross income be for the current year? Fully explain the effect of the passive activity investments on her adjusted gross income.

b. Because Passive Activity 1 has been such a loser, Erline is considering selling it. However, she is concerned about the effect of the sale on her taxable income because her tax advisor told her that her basis in the activity is only $\$ 14,000$ and she could sell it for $\$ 32,000$ . Explain the effect on her taxable income if she sells Activity 1 for $\$ 32,000$ .

Analyze the principles of Comer's School Development Program and their impact on school-family-community partnerships.

Understand the importance of community engagement for children's learning and development.

Distinguish between family support and family empowerment within educational contexts.

Evaluate the influence of family beliefs, such as faith, on family functioning and educational outcomes.

---

Definitions:

Constant Returns to Scale

The situation in which a proportional increase in all inputs leads to an equal proportional increase in output.

Wage Rate

The standard amount of compensation paid to an employee per unit of time worked, typically expressed on an hourly or monthly basis.

Competitive Market

A market structure characterized by a large number of buyers and sellers, free entry and exit, and a product that is similar across suppliers, leading to price determination by supply and demand.

Production Function

A mathematical schema that links the inputs utilized in creating goods or services to the outputs produced.