Sandra acquired a passive activity three years ago.Until last year, the activity was profitable and her at-risk amount was $300,000.Last year, the activity produced a loss of $100,000, and in the current year, the loss is $50,000.Assuming Sandra has received no passive activity income in the current or prior years, her suspended passive activity loss from the activity is:

Question

Quizplus · Accepted Answer

When the passive activity was profitable, the at-risk amount was $300,000. This means that Sandra had invested $300,000 in the activity.

In the following year, the activity produced a loss of $100,000. Since Sandra's at-risk amount was only $300,000, she was not able to deduct the entire loss. Instead, she could only deduct $300,000, and the remaining $100,000 was suspended.

In the current year, the activity produced a loss of $50,000. Since Sandra has received no passive activity income in the current or prior years, she can deduct the entire $50,000 loss.

Therefore, the suspended passive activity loss from the activity is $100,000 from last year and $50,000 from the current year, making the best answer choice B.

Sandra Acquired a Passive Activity Three Years Ago