Last year, Mr. Margot purchased a limited interest in a business partnership, which is his only passive activity. Last year, he was allocated $14,900 of the partnership's ordinary business loss. This year, he was allocated $7,700 of the partnership's ordinary business income. Which of the following statements is false?

Question

Quizplus · Accepted Answer

The statements provided are all true based on the rules governing passive activity losses and income. Last year, Mr. Margot could not deduct his allocated partnership loss if he had no passive income to offset it. This year, he can use $7,700 of last year's loss to offset this year's income, leaving him with a $7,200 passive activity loss carryforward.

Last Year, Mr