Catfish, Inc How Much of Catfish's Share of Trout's Loss May It

Multiple Choice

Catfish, Inc., a closely held corporation which is not a PSC, owns a 45% interest in Trout Partnership, which is classified as a passive activity. Trout's taxable loss for the current year is $250,000. During the year, Catfish receives a $60,000 cash distribution from Trout. Other relevant data for Catfish are as follows: $\begin{array}{lr}\text { Net income from operations } & \$ 800,000 \\\text { Dividend income } & 25,000 \\\text { Rent income } & 20,000\end{array}$ How much of Catfish's share of Trout's loss may it deduct in calculating its taxable income?

A) $0
B) $20,000
C) $45,000
D) $112,500
E) None of the above