Linda owns three passive activities that had the following results for the current year:
?
$$\begin{array} { l c }
\text { Passive Activity A } & \$ ( 4,500 ) \
\text { Passive Activity B } & 20,000 \
\text { Passive Activity C } & ( 25,500 )
\end{array}$$
If none of the passive activities are rental real estate activities, what is the amount of suspended loss attributable to Activity A?
A)$- 0 -
B)$ 1,500
C)$ 4,500
D)$ 8,500
E)$10,000

Question

Linda owns three passive activities that had the following results for the current year:
?
$$\begin{array} { l c } 
\text { Passive Activity A } & \$ ( 4,500 ) \
\text { Passive Activity B } & 20,000 \
\text { Passive Activity C } & ( 25,500 )
\end{array}$$
If none of the passive activities are rental real estate activities, what is the amount of suspended loss attributable to Activity A?
A)$- 0 -
B)$ 1,500
C)$ 4,500
D)$ 8,500
E)$10,000

Quizplus · Accepted Answer

The total passive income from Activity B is $20,000. The total passive losses from Activities A and C are $30,000 ($4,500 + $25,500). The allowable loss is limited to the passive income, so $20,000 of the $30,000 loss can be deducted. The remaining $10,000 is suspended. The suspended loss is allocated proportionally: Activity A's suspended loss is $4,500 / $30,000 * $10,000 = $1,500.

Linda Owns Three Passive Activities That Had the Following Results