Baxter Invested $50,000 in an Activity in 2012

question 66

Multiple Choice

Baxter invested $50,000 in an activity in 2012.At the beginning of 2014,Baxter's at-risk amount was $10,000.Baxter's share of losses from the activity were as follows: Year GainLoss)
2014 $25,000 )
2015 10,000
2016 10,000
If you ignore the passive loss rules,how much income/loss will Baxter have from the activity in 2016?

• A)$5,000.
• B)$15,000.
• C)$10,000.
• D)$0.

---

Definitions:

Sensitivity Analysis

A method for assessing the impact of varying levels of an independent variable on a specific dependent variable, assuming certain conditions.

Cost Structure

The composition of a company’s costs, including the ratio of fixed to variable costs and how these affect overall profitability.

Fixed Costs

Regardless of production or sales volumes, certain costs, like rent, salaries, and insurance, do not vary.

Variable Costs

Costs that vary directly with the level of production or sales volume, such as raw materials and direct labor.