Kim dies owning a passive activity with a basis of $75,000,a fair market value of $140,000,and suspended losses of $80,000.An $80,000 passive loss can be deducted on Kim's final income tax return.

Question

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Suspended passive losses are not deductible on the final tax return if they exceed the gain from the disposition of the passive activity. The losses can only be deducted to the extent of the gain, which is $65,000 ($140,000 FMV - $75,000 basis).

Kim Dies Owning a Passive Activity with a Basis of $75,000,a