Spencer Has an Ownership Interest in Three Passive Activities

question 22

Multiple Choice

Spencer has an ownership interest in three passive activities.In the current tax year,the activities had the following income and losses: How much in passive losses can Spencer deduct?

• A)$0.
• B)$12,000.
• C)$20,000.
• D)$16,000.

---

Definitions:

Operating Expense

Refers to the costs associated with the day-to-day operations of a business, excluding costs related to production.

Receivables

Amounts due to be paid to a company by its customers for goods or services delivered on credit terms.

Bad Debt Expense

The expense recognized when a business determines that an amount owed by a debtor is unlikely to be collected.

Specific Customer's Account

An account representing the transactions and outstanding balance related to a particular customer.