Answer: The amount of passive activity losses that White Corporation can deduct depends on whether it meets the requirements of the passive activity loss rules.
Under the passive activity loss rules, losses from passive activities (such as rental real estate) can only be used to offset income from other passive activities or from passive income, up to the amount of the passive income. If there is still unused passive activity loss after offsetting the passive income, it can be carried forward to future years.
In this case, we are not given information about whether White Corporation has any passive income, so we cannot determine the exact amount of passive activity losses that can be deducted. However, we can make some general observations:
If White Corporation has no passive income, it cannot deduct any of the $150,000 of passive activity losses in the current year. The losses can be carried forward to future years, however.
If White Corporation has $30,000 or more of passive income, it can use all of the $150,000 of passive activity losses to offset the active business income of $120,000, resulting in a net loss of $30,000. This net loss can then be used to offset other income or carried forward to future years.
If White Corporation has between $0 and $30,000 of passive income, it can use up to that amount of passive income to offset the passive activity losses. For example, if White Corporation has $20,000 of passive income, it can use $20,000 of the passive activity losses to offset that income, leaving $130,000 of passive activity losses to carry forward to future years.
Therefore, without information about the amount of passive income, we cannot determine the exact amount of passive activity losses that White Corporation can deduct in the current year.
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