Practice Quiz

Financial Planner

Category - Tax Planning

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Losses from a passive activity can only offset positive income from what type of activity?
  1. Passive activity
  2. Active activity
  3. Portfolio income
  4. Any type of activity that was sold or otherwise disposed of
Explanation
Answer: A - A loss from a passive activity cannot offset income from active activities or portfolio income. They can only offset income from other passive activities. There is one exception: in the year a taxpayer disposed of a passive activity, he or she can offset other types of income.
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