1. Sally sells a passive activity with an adjusted basis of $145,000 for $225,000. Suspended losses attributable to this property total $35,000. The total gain and the taxable gain are:

a.$80,000 total gain; $80,000 taxable gain.

b.$45,000 total gain; $45,000 taxable gain.

c.$80,000 total gain; $0 taxable gain.

d.$80,000 total gain; $45,000 taxable gain.

e.None of the above.

2. Sycamore Corporation, a closely held nonpersonal service corporation, has $300,000 of passive losses, $240,000 of active business income, and $40,000 of portfolio income. How much of the passive loss may Sycamore Corporation deduct?

a.         $0.

b.         $40,000.

c.         $240,000.

d.         $300,000.

e.         None of the above