Art's at-risk amount in a passive activity was $60,000 at the beginning of 2015.His loss from the activity in 2015 is $80,000,and he had no passive activity income during the year.Art had $20,000 of passive activity income from the activity in 2016.Under the passive activity loss rules,Art's suspended loss at the end of 2016 is:

Question

Quizplus · Accepted Answer

According to the passive activity loss rules, Art's suspended loss at the end of 2015 was $60,000 - $80,000 = $20,000. Since Art had no passive activity income in 2015, this entire loss was suspended. 
In 2016, Art had $20,000 of passive activity income, which means that only $20,000 of the suspended loss from 2015 can be used to offset this income. The remaining suspended loss at the end of 2016 would be $60,000 - $20,000 = $40,000. However, since this loss is still suspended, Art cannot currently use it to offset any income. Therefore, the answer is (D) $60,000.

Art's At-Risk Amount in a Passive Activity Was $60,000 at the Beginning