Carol Made a Gift to Tim of a Passive Activity

Carol 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 he 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 he can deduct the $20,000 of suspended losses in the future.
E) None of these applies here.