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14. Shunwei reports the following income and loss: Salary Income from activity A Loss from activity B Loss from activity C $



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Answer #1

Option B is correct

B) salary of 100000 and deductible net losses 10000

Because:-

  • Passive activity losses can only be used to offset passive income
  • Passive activity losses cannot be setoff with active income like salary,wages,etc

Salary income will be fully taken

Passive income of activity A i.e. 50000 will be offset with activity B&C losses i.e. 20000+40000

So, the net losses will be 10000

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