11) Kim made a gift to Pat of a passive activity with an adjusted basis of $50,0

Question

11) Kim made a gift to Pat of a passive activity with an adjusted basis of $50,000, suspended losses of $20,000, and a fair market value of $60,000. Which of the following statements is true? (I AM PRETTY SURE THE ANSWER IS B, BUT CAN YOU PLEASE EXPLAIN WHY IN WORDS!!!)

A. Pat’s adjusted basis is $60,000

B. Pat’s adjusted basis is $50,000, and Pat can deduct the $20,000 of suspended losses in the future.

C. Pat’s adjusted basis is $60,000 and $10,000 of suspended losses are lost

D. Pat’s adjusted basis is $70,000.

E. None of the above

Explanation / Answer

Ans e none of the above

Pat basis in property is $80000 as suspended losses of $20000 Is included in the basis hence the basis in the property is 60000+20000=$80000

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