Catfish, Inc., a closely held corporation which is not a PSC, owns a 45% interest in Trout Partnership, which is classified as a passive activity. Trout's taxable loss for the current year is $250,000. During the year, Catfish receives a $60,000 cash distribution from Trout. Other relevant data for Catfish are as follows: How much of Catfish's share of Trout's loss may it deduct in calculating its taxable income?
A) $0
B) $20,000
C) $45,000
D) $112,500
E) None of the above

Question

Catfish, Inc., a closely held corporation which is not a PSC, owns a 45% interest in Trout Partnership, which is classified as a passive activity. Trout's taxable loss for the current year is $250,000. During the year, Catfish receives a $60,000 cash distribution from Trout. Other relevant data for Catfish are as follows:  How much of Catfish's share of Trout's loss may it deduct in calculating its taxable income?
A) $0 
B) $20,000 
C) $45,000 
D) $112,500 
E) None of the above

Quizplus · Accepted Answer

The Answer of Catfish, Inc., a closely held corporation which is not a PSC, owns a 45% interest in Trout Partnership, which is classified as a passive activity. Trout's taxable loss for the current year is $250,000. During the year, Catfish receives a $60,000 cash distribution from Trout. Other relevant data for Catfish are as follows:  How much of Catfish's share of Trout's loss may it deduct in calculating its taxable income?
A) $0 
B) $20,000 
C) $45,000 
D) $112,500 
E) None of the above