Gray Company, a closely held Ccorporation, incurs a $50,000 loss on a passive ac

Question

Gray Company, a closely held Ccorporation, incurs a $50,000 loss on a passive activity during theyear. The company has active income of $34,000 and portfolioincome of $24,000. If Gray is a not a personal servicecorporation, it may deduct $34,000 of the passive loss.
       True
       False


Wolf Corporation has active income of$55,000 and a passive loss of $33,000 in the current year. Wolf cannot deduct the $33,000 loss if it is a closely held Ccorporation that is not a personal service corporation.
       True
       False


Linda owns investments that produceportfolio income, and she also owns Activity A, which produceslosses. From a tax perspective, Linda will be better off ifActivity A is not passive.
       True
       False


Dick participates in an activity for90 hours during the year. He has no employees and there areno other participants. Dick is a materialparticipant.
       True
       False


Rhonda participates for 95 hoursduring the year in an activity she owns. She has no employeesand is the only participant in the activity. The activity isa significant participation activity.
       True
       False


Tom participates for 300 hours inActivity A and 250 hours in Activity B, both of which are nonrentalbusinesses. Both activities are active.       True
       False


When assessing whether an individualis a material participant, participation by an owner’s spousegenerally counts.
      True
       False
       True
       False


Wolf Corporation has active income of$55,000 and a passive loss of $33,000 in the current year. Wolf cannot deduct the $33,000 loss if it is a closely held Ccorporation that is not a personal service corporation.
       True
       False


Linda owns investments that produceportfolio income, and she also owns Activity A, which produceslosses. From a tax perspective, Linda will be better off ifActivity A is not passive.
       True
       False


Dick participates in an activity for90 hours during the year. He has no employees and there areno other participants. Dick is a materialparticipant.
       True
       False


Rhonda participates for 95 hoursduring the year in an activity she owns. She has no employeesand is the only participant in the activity. The activity isa significant participation activity.
       True
       False


Tom participates for 300 hours inActivity A and 250 hours in Activity B, both of which are nonrentalbusinesses. Both activities are active.       True
       False


When assessing whether an individualis a material participant, participation by an owner’s spousegenerally counts.

Explanation / Answer

Answers: 1. True 2. False 3. True 4. False 5. False 6. False 7. False

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