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

Question

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

Quizplus · Accepted Answer

To determine the amount of suspended loss attributable to Activity C, we need to calculate the net income/loss from each activity and then apply the passive activity loss rules. 
Activity A: $15,000 loss
Activity B: $5,000 profit
Activity C: $20,000 loss

Since none of the activities are rental real estate activities, they are all subject to the passive activity loss rules. The losses from Activities A and C will be suspended (not currently deductible) to the extent that there is not enough passive income to offset them.

In this case, since there is only $5,000 of passive income from Activity B, the $15,000 loss from Activity A will be suspended in full, and $5,000 of the $20,000 loss from Activity C will be deductible, leaving $15,000 of suspended losses from Activity C.

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

Loren Owns Three Passive Activities That Had the Following Results