During the year,Mark reports $90,000 of active business income from his law practice.He also owns two passive activities.From Activity A,he earns $20,000 of income,and from Activity B,he incurs a $30,000 loss.As a result,Mark
A)reports AGI of $80,000.
B)reports AGI of $90,000 with a $10,000 passive loss carryover.
C)reports AGI of $90,000 with a $30,000 passive loss carryover.
D)reports AGI of $110,000 with a $30,000 passive loss carryover.

Question

Quizplus · Accepted Answer

Passive losses can only offset passive income. Mark's $30,000 loss from Activity B can offset the $20,000 income from Activity A, resulting in a net passive loss of $10,000, which is carried over. His AGI is based on his active income of $90,000.

During the Year,Mark Reports $90,000 of Active Business Income from His