Caroyl made a gift to Tim of a passive activity (adjusted basis of $50,000, suspended losses of $20,000, and a fair market value of $80,000). No gift tax resulted from the transfer.
A) Tim's adjusted basis is $80,000, and Tim can deduct the $20,000 of suspended losses in the future.
B) Tim's adjusted basis is $80,000.
C) Tim's adjusted basis is $50,000, and the suspended losses are lost.
D) Tim's adjusted basis is $50,000, and Tim can deduct the $20,000 of suspended losses in the future.
E) None of the above.

Question

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The Answer of Caroyl made a gift to Tim of a passive activity (adjusted basis of $50,000, suspended losses of $20,000, and a fair market value of $80,000). No gift tax resulted from the transfer.
A) Tim's adjusted basis is $80,000, and Tim can deduct the $20,000 of suspended losses in the future.
B) Tim's adjusted basis is $80,000.
C) Tim's adjusted basis is $50,000, and the suspended losses are lost.
D) Tim's adjusted basis is $50,000, and Tim can deduct the $20,000 of suspended losses in the future.
E) None of the above.

Caroyl Made a Gift to Tim of a Passive Activity