Loren owns three passive activities that had the following results for the current year:
$\begin{array}{ll}
\text { Passive Activity A } & \$ 25,000 \
\text { Passive Activity B } & (10,000) \
\text { Passive Activity C } & (40,000)
\end{array}$
If none of the passive activities are rental real estate activities,what is the amount of suspended loss attributable to Activity C?

Question

Quizplus · Accepted Answer

If none of the passive activities are rental real estate activities, then the losses can only be offset against passive income.

Since Passive Activity A had $25,000 of income, we can use up to $25,000 of the losses from Activities B and C to offset it.

That means the remaining losses (if any) will be suspended.

$25,000 (passive income) - $10,000 (loss from Activity B) = $15,000

Since $15,000 is still available to offset the loss from Activity C, the amount of suspended loss attributable to Activity C would be $40,000 - $15,000 = $25,000.

Therefore, the correct answer is (C) $20,000.

Loren Owns Three Passive Activities That Had the Following Results