5) Joy reports the following income and loss: alary Income from activity A $120,

Question

5) Joy reports the following income and loss: alary Income from activity A $120,000 60,000 oss from activity B Loss from activity C Activities A, B, and C are all passive activities. Based on this information, Joy has A) adjusted gross income of $90,000. B) salary of $120,000 and deductible net losses of $30,000. C) salary of $120,000 and net passive losses of $30,000 that will be carried over. D) salary of $120,000, passive income of $60,000, and passive loss carryovers of $90,000. (35,000 55,000

Explanation / Answer

Option C is Correct.
Salary = $120,000 (given)
All activities are passive activities so Net passive loss = (60000-35000-55000) = $30,000
Passive loss $30,000 will be carry over to next year.

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