Joy reports the following income and loss: Activities A,B,and C are all passive activities.
Based on this information,Joy has
A)adjusted gross income of $90,000.
B)salary of $120,000 and deductible net losses of $30,000.
C)salary of $120,000 and net passive losses of $30,000 that will be carried over.
D)salary of $120,000,passive income of $60,000,and passive loss carryovers of $90,000.

Question

Joy reports the following income and loss:  Activities A,B,and C are all passive activities.
Based on this information,Joy has
A)adjusted gross income of $90,000. 
B)salary of $120,000 and deductible net losses of $30,000. 
C)salary of $120,000 and net passive losses of $30,000 that will be carried over. 
D)salary of $120,000,passive income of $60,000,and passive loss carryovers of $90,000.

Quizplus · Accepted Answer

Joy's salary is $120,000 and she has net passive losses of $30,000, which means she can deduct up to $30,000 of passive losses against her other income. The remaining $60,000 of passive losses will be carried over to future years. Therefore, her adjusted gross income is $90,000 ($120,000 - $30,000).

Joy Reports the Following Income and Loss: Activities A,B,and