If a Taxpayer Sells a Passive Activity with Suspended Passive

question 51

Multiple Choice

If a taxpayer sells a passive activity with suspended passive activity losses from prior years, what type of income can be offset by the suspended passive losses in the year of sale?

• A) Passive activity income
• B) Portfolio income
• C) Active business income
• D) Any of these types of income can be offset.
• E) None of these. The suspended losses disappear when the passive activity is sold.

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Definitions:

Sales Tools

Instruments or resources used to assist in the sales process, including software, techniques, and methodologies.

Wholesalers

Businesses or individuals that purchase large quantities of goods from manufacturers or importers to sell in smaller quantities to retailers or other businesses.

Product Placement

A consumer sales promotion tool that uses a brand-name product in a movie, television show, video game, or a commercial for another product.

FedEx Truck

A vehicle used by FedEx, a global courier delivery services company, for the transportation and delivery of packages and goods.