Sandra acquired a passive activity three years ago.Until last year, the activity was profitable and her at-risk amount was $300,000.Last year, the activity produced a loss of $100,000, and in the current year, the loss is $50,000.Assuming Sandra has received no passive income in the current or prior years, her suspended passive loss from the activity is:

Question

Quizplus · Accepted Answer

When the activity produced a loss of $100,000 last year, Sandra's at-risk amount decreased to $200,000 ($300,000 - $100,000). Therefore, the amount of the loss that was not deductible because it exceeded her at-risk amount was $100,000. In the current year, the activity produced a loss of $50,000 which is also not deductible. Therefore, the total suspended passive loss from the activity is $150,000 ($100,000 from last year + $50,000 from the current year). Choice B is the only choice that reflects this.

Sandra Acquired a Passive Activity Three Years Ago