Josh has investments in two passive activities.Activity A, acquired three years ago, produces income in the current year of $60,000.Activity B, acquired last year, produces a loss of $100,000 in the current year.At the beginning of this year, Josh's at-risk amounts in Activities A and B are $10,000 and $100,000, respectively.What is the amount of Josh's suspended passive activity loss with respect to these activities at the end of the current year?
A)$0
B)$36,000
C)$40,000
D)$100,000
E)None of these

Question

Quizplus · Accepted Answer

The suspended passive activity loss with respect to Activity B is $40,000 ($100,000 - $60,000). Since Josh's at-risk amount in Activity A is $10,000, all of Activity A's income is currently deductible and there is no suspended passive activity loss. Therefore, the total suspended passive activity loss is $40,000.

Josh Has Investments in Two Passive Activities