If a Taxpayer Sells a Passive Activity with Suspended Passive

Multiple Choice

If a taxpayer sells a passive activity with suspended passive activity losses from prior years, what type of income can generally be offset by the suspended passive losses in the year of sale?

A) Passive activity income
B) Portfolio income
C) Active business income
D) Any of these types of income can be offset
E) None of the choices are correct. The suspended losses disappear when the passive activity is sold.