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2. Ms. Wolcott purchased a limited interest in Hance Partnership in 2019. Hance reported a net loss for 2019; Ms. Wolcott's share of this loss
2. Ms. Wolcott purchased a limited interest in Hance Partnership in 2019. Hance reported a net loss for 2019; Ms. Wolcott's share of this loss was ($7,000). Besides her investment in Hance, Ms. Wolcott had no other investments in passive activities in 2019. Hance projects that it will operate at break-even for the next several years. However, given Hance's excellent longer- term prospects, Ms. Wolcott has no desire to sell her investment in the partnership. Now in 2020, Ms. Wolcott is considering making one of three alternative $300,000 investments: Investment A is a limited interest in Granite Partnership. If Ms. Wolcott makes this investment, she expects her share of Granite's 2020 business income to be $20,000. Investment B is an investment in a taxable bond fund that is expected to return 7% in interest income per year. Investment C is in Sapphire Inc. corporate stock that is expected to pay $18,000 in qualified dividends per year. Assuming that Ms. Wolcott's ordinary income tax rate is 35% and long-term capital gains tax rate is 15%, which investment (i.e., Granite Partnership, the bond fund, or the corporate stock) would yield the greatest post-tax return in 2020
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