Ferris Owns an Interest In, but Does Not Materially Participate

question 17

Multiple Choice

Ferris owns an interest in, but does not materially participate in, an activity. He has $30,000 at-risk. The business produced a loss in the current year and Ferris's share of the loss is $45,000. Assuming Ferris has no passive income, how much of the $45,000 loss will be deductible by Ferris?

• A) $0.
• B) $30,000.
• C) $45,000.
• D)Cannot be determineD.Only $30,000 of the loss gets through the at-risk rules. However, since there is no passive income, the entire loss is suspended by the passive activity loss rules.

---

Definitions:

Cancer Alley

A colloquial name for an area along the Mississippi River between Baton Rouge and New Orleans, known for a high concentration of industrial plants and associated with elevated cancer rates among its population.

Science and Technology

Fields of study and application that involve the systematic study of the natural world through observation and experiment, and the application of scientific knowledge for practical purposes.

The Matrix

A 1999 science fiction film that depicts a dystopian world where humanity is unknowingly trapped inside a simulated reality created by intelligent machines.

Monetary Damage

Financial compensation awarded in response to a loss or injury suffered by an individual or entity, often determined through legal proceedings.