A passive activity
I.includes an interest in a limited partnership held by a limited partner investor.
II.includes a working interest in an oil and gas deposit.

A)Only statement I is correct.
B)Only statement II is correct.
C)Both statements are correct.
D)Neither statement is correct.

Question

A passive activity
I.includes an interest in a limited partnership held by a limited partner investor.
II.includes a working interest in an oil and gas deposit.
​
A)Only statement I is correct.
B)Only statement II is correct.
C)Both statements are correct.
D)Neither statement is correct.

Quizplus · Accepted Answer

A passive activity typically includes an interest in a limited partnership held by a limited partner investor. The limited partner is passive because they have limited control over the partnership and are not involved in the day-to-day operations. On the other hand, a working interest in an oil and gas deposit requires active involvement in the drilling and production process, making statement II incorrect.

A Passive Activity I.includes an Interest in a Limited Partnership Held by a Held