Jana reports the following income and loss: Activities A,B,and C are all passive activities. Based on this information,Jana will recognize
A)adjusted gross income of $80,000.
B)salary of $120,000 and deductible net losses of $40,000.
C)salary of $120,000,passive income of $60,000,and passive loss carryovers of $100,000.
D)salary of $120,000 and net passive losses of $40,000 that will be carried over.

Question

Jana reports the following income and loss:  Activities A,B,and C are all passive activities. Based on this information,Jana will recognize
A)adjusted gross income of $80,000. 
B)salary of $120,000 and deductible net losses of $40,000. 
C)salary of $120,000,passive income of $60,000,and passive loss carryovers of $100,000. 
D)salary of $120,000 and net passive losses of $40,000 that will be carried over.

Quizplus · Accepted Answer

Jana has a salary income of $120,000 and a net passive loss of $40,000 from her passive activities A, B, and C. Since the activities are passive, Jana cannot use the losses to offset her salary income. Instead, she can carry over the net passive loss of $40,000 to future years to offset any future passive income or gain. Therefore, Jana's taxable income for the year is $120,000, and she will have a passive loss carryover of $40,000.

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