18. John is an individual and is a real estate professional and materially participates in Partnership A and B. John is a limited partner in two real estate partnerships. Partnership A produces a passive loss of $3,000 (allocated to John). Partnership B produces passive income of $5,000 (allocated to John). How does John treat the income/(loss) on his tax return?

A. Include $2,000 net passive income in taxable income.

B. Recognize income of $5,000 and dont deduct losses of $3,000.

C. Recognize no income or loss.

D. Deduct $3,000 loss but dont recognize $5,000 income.

E. None of the above.

29. Which of the following entities are never subject to federal tax on its income:

A. A tax exempt investor.

B. A state government sponsored pension plan that is an integral part of the state.

C. An individual who is a real estate professional.

D. Only A & B. E. All of the above are subject to some level of federal taxes.