Answer:
Based on this information, Anna has the following suspended losses:
A) Activity B Activity C
$11,667 $18,333
Explanation:
a) Data and Calculations:
Income and Loss:
Salary $ 135,000
Income from activity A 60,000
Loss from activity B ( 35,000)
Loss from activity C ( 55,000)
The loss from activity B and activity C are reduced by the income from activity A in proportion.
Thus, the income from activity A reduces the losses in B and C:
Income from activity A $60,000
Activity B loss of $35,000 is reduced by $60,000 * $35,000/$90,000 = $23,333 to $11,667 ($35,000 - $23,333)
Activity C loss of $55,000 is reduced by $60,000 * $55,000/$90,000 = $36,667 to $18,333 ($55,000 - $36,667)
b) Note that the losses from activities B and C cannot be reduced by the salary income because both activities are passive sources of income and not active like salary.
