Final answer:
Darien's passive activity will likely be listed at its fair market value of $52,000 on his final tax return and the suspended loss of $22,000 may be deductible. However, the exact treatment can depend on specific IRS regulations and should be verified with a tax professional.
Step-by-step explanation:
The subject of this question revolves around how a passive activity with a suspended loss is treated for tax purposes upon the owner's death. When Darien dies, the passive activity has a fair market value of $52,000, which is higher than his original basis of $36,000. Typically, the heirs would receive a step-up in basis, which means the basis of the property they inherit is equal to the fair market value at the time of the decedent’s death.
For tax purposes, the suspended loss of $22,000 can potentially be deductible on Darien’s final tax return, but this depends on specific IRS regulations and the interactions with the step-up in basis rules. In some cases, suspended losses may be fully allowed in the year of the taxpayer's death, but one should consult IRS rules or a tax professional for the exact treatment in such circumstances.
Therefore, on Darien's final tax return, the property would generally be listed at its fair market value, potentially allowing for the deduction of the suspended losses. However, this is dependent on the tax code and guidance for the relevant tax year.