All of the outstanding stock of a closely held C corporation is owned equally by Evelyn Humo and Steve Bufusno. In 2019, the corporation generates taxable income of $20,000 from its active business activities. In addition, it earns $10,000 of taxable interest income from investments and incurs a $40,000 loss from a passive activity. How much income does the C corporation report for 2019?

1) $10,000 of portfolio income

2) $0

3) $20,000 of portfolio income

4) None of these

Mike, who is single, has $100,000 of salary, $15,000 of income from a limited partnership, and a $30,000 passive loss from a real estate rental activity in which he actively participates. His modified adjusted gross income is $100,000. Of the $30,000 loss, how much is deductible?

1) $10,000

2) $25,000

3) $30,000

4) $0

During 2019, Hugh Hughes reported the following income and loss:

Activity X ($50,000)

Activity Y $20,000

Both Activity X and Activity Y are passive to Mr. Hughes. Hugh purchased Activity X in 1988 and Activity Y in 2013. How much of the net loss may Mr. Hughes deduct in 2019?

1) $3,000

2) $50,000

3) $30,000

4) $0