eBook Calculator Non-Real Estate Activities, Disposition of Passive Activities (LO. 7) Mason owns a passive...
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eBook Calculator Non-Real Estate Activities, Disposition of Passive Activities (LO. 7) Mason owns a passive activity that generates a loss of $14,000 in 2018, $12,000 in 2018, and income of $4,000 in 2020. In 2019, Mason purchases a second passive activity that has passive income of $6,000 in 2019 and $10,000 in 2020. Assume that neither passive activity involves rental real estate. At the end of 2020, Mason sells the passive activity that generated the losses for $16,000. What is the effect on his taxable income of his basis in the activity sold is: a. $4,000: Mason has a long-term capital gain of X on the sale of the passive activity. The total effect of the sale is to increase Mason's income by X. b. $21,000: Mason has a long-term capital loss or from the sale of the passive activity. If Mason has no other capital gains in 2020, then only $ 3,000 of the loss is deductible. This would result in a s X reduction in his taxable income Feed Disposition of passive activities requires that the suspended losses be accounted for
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