Catfish, Inc., a closely held corporation which is not a PSC, owns a 45% interest in Trout Partnership, which is classified as a passive activity.Trout's taxable loss for the current year is $250,000.During the year, Catfish receives a $60,000 cash distribution from Trout.Other relevant data for Catfish are as follows. How much of Catfish's share of Trout's loss may it deduct in calculating its taxable income?
A)$0
B)$20,000
C)$45,000
D)$112,500

Question

Catfish, Inc., a closely held corporation which is not a PSC, owns a 45% interest in Trout Partnership, which is classified as a passive activity.Trout's taxable loss for the current year is $250,000.During the year, Catfish receives a $60,000 cash distribution from Trout.Other relevant data for Catfish are as follows.  How much of Catfish's share of Trout's loss may it deduct in calculating its taxable income?
A)$0 
B)$20,000 
C)$45,000 
D)$112,500

Quizplus · Accepted Answer

The Answer of Catfish, Inc., a closely held corporation which is not a PSC, owns a 45% interest in Trout Partnership, which is classified as a passive activity.Trout's taxable loss for the current year is $250,000.During the year, Catfish receives a $60,000 cash distribution from Trout.Other relevant data for Catfish are as follows.  How much of Catfish's share of Trout's loss may it deduct in calculating its taxable income?
A)$0 
B)$20,000 
C)$45,000 
D)$112,500