Linda Owns Three Passive Activities That Had the Following Results

question 55

Multiple Choice

Linda owns three passive activities that had the following results for the current year:
?
$$\begin{array} { l c } \text { Passive Activity A } & \$ ( 4,500 ) \\\text { Passive Activity B } & 20,000 \\\text { Passive Activity C } & ( 25,500 ) \end{array}$$
If none of the passive activities are rental real estate activities, what is the amount of suspended loss attributable to Activity A?

• A)$- 0 -
• B)$ 1,500
• C)$ 4,500
• D)$ 8,500
• E)$10,000

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Definitions:

Net Income

The amount of money left after all expenses, taxes, and costs have been subtracted from total revenue, indicating the profit earned by a company.

Indirect Method

A cash flow statement preparation method that adjusts net income for the changes in balance sheet accounts to calculate the cash from operating activities.

Depreciation

The methodical distribution of a physical asset's cost across its lifetime, reflecting the asset's depreciation, wear, and eventual obsolescence.

Fixed Assets

Long-term tangible assets, such as buildings, machinery, and equipment, used in the operations of a business and not intended for resale.