Kim Made a Gift to Sam of a Passive Activity

Kim made a gift to Sam of a passive activity (adjusted basis of $50,000,suspended losses of $20,000,and a fair market value of $80,000) .No gift tax resulted from the transfer.

A) Sam's adjusted basis is $80,000.
B) Sam's adjusted basis is $50,000,and Sam can deduct the $20,000 of suspended losses in the future.
C) Sam's adjusted basis is $80,000,and Sam can deduct the $20,000 of suspended losses in the future.
D) Sam's adjusted basis is $50,000,and the suspended losses are lost.
E) None of the above.

Correct Answer:

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