Jana reports the following income and loss Salary Income from activity A Loss from activity B Loss from activity C 120,000 60,000 (30,000) (70.000) Activities A, B, and C are all passive activities. Based on this information, Jana will recognize A. salary of $120,000, passive income of $60,000, and passive loss carryovers of $100,000 B. salary of S 120,000 and net passive losses of $40,000 that will be carried over. C. adjusted gross income of $80,000 D. salary of S 120,000 and deductible net losses of S40.000.

Question

Eleanor Griffin

Business

30 March, 00:00

Jana reports the following income and loss Salary Income from activity A Loss from activity B Loss from activity C 120,000 60,000 (30,000) (70.000) Activities A, B, and C are all passive activities. Based on this information, Jana will recognize A. salary of $120,000, passive income of $60,000, and passive loss carryovers of $100,000 B. salary of S 120,000 and net passive losses of $40,000 that will be carried over. C. adjusted gross income of $80,000 D. salary of S 120,000 and deductible net losses of S40.000.

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Answers (2)

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Lillianna · Answer 1

Based on this information, Jana will recognize - salary of $120,000 and net passive losses of $40,000 that will be carried over. (B)

Explanation:

Total loss from activity B & C of $100000 will be adjusted from activity A upto $60000 and balance loss (ie - $40000) will be carried over.

Karlie Moran · Answer 2

D. salary of S 120,000 and deductible net losses of S40.000

Explanation:

As the other activitities are passive they will not be part of the salaries earnings but, will carryforward to be deductible in the subsequent years against the gain of Jana passive activities

This is because, the Internal Revenue System (IRS) do not allow to offset the ordinary income (salaries) with losses from passive income in what is called

"Passive Activity Loss Rules"