Question

Several years ago, Joy acquired a passive activity. Until 2018, the activity was profitable. Joy's at-risk amount at the beginning of 2018 was $250,000. The activity produced losses of $100,000 in 2018, $80,000 in 2019, and $90,000 in 2020. During the same period, no passive activity income was recognized. How much is suspended under the at-risk rules and the passive activity loss rules at the beginning of 2021

Answer 1

b. $20,000: $250,000

Step-by-step explanation:

The computation is shown below:

The passive activity rules at the opening of 2021 would be equivalent to the amount given i.e. $250,000

And, the suspended amount would be

= $100,000 + $80,000 + $90,000 - $250,000

= $270,000 - $250,000

= $20,000

Hence, the correct option is b.