Charles Owns a Business with Two Separate Departments

question 29

Multiple Choice

Charles owns a business with two separate departments. Department A produces $100,000 of income and Department B incurs a $60,000 loss. Charles participates for 550 hours in Department A and 100 hours in Department B. He has full-time employees in both departments.

• A) If Charles elects to treat both departments as a single activity, he cannot offset the $60,000 loss against the $100,000 income.
• B) Charles may not treat Department A and Department B as separate activities because they are parts of one business.
• C) If Charles elects to treat the two departments as separate activities, he can offset the $60,000 loss against the $100,000 income.
• D) If Charles elects to treat both departments as a single activity, he can offset the $60,000 loss against the $100,000 income.
• E) None of the above.

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Definitions:

Partisan Political Activity

Involvement in activities that support or oppose political parties or candidates for public office, often restricted for certain entities like nonprofits.

Committee

A group of individuals designated to perform a specific task or to oversee a particular area of operation within an organization.

Nonprofit Organization

An organization that operates for the collective, public, or social benefit, reinvesting any surplus revenues in the mission of the organization rather than distributing them as profit or dividends.

Legislation

A system of laws suggested or enacted by a governmental body.