Question

Randall invested 200,000 in activity A and 100,000 in activity B (both passive) in 1998 at the beginning of 2011 randall’s at-risk amount was 20,000 in A and 15,000 in B activity a had a loss of 25,000 and activity B had income of 30,000 what is the amount of income or loss recognized in 2011 from these activities?
a- 0
b- 5,000 income
c- 10,000 income
d- 25,000 losses

Answer 1

Answer:

c- 10,000 income

Explanation:

The computation of the mount of income or loss recognized in 2011 from these activities is shown below

As in the question it is mentioned that the activity A has $20,000 risk so $20,000 would be allowed. And, there is a passive income of $30,000

So the amount of the income recognzied would be

= $30,000 - $20,000

= $10,000 income

Therefore the correct option is c.