Complete the following requirements regarding the statement "On a taxable disposition of a passive activity, the taxpayer can use any suspended losses and credits related to that activity." (Note: Assume that this is the only passive activity investment.)

a. Do you agree or disagree with the statement above? Disagree

b. Explain. When the only passive activity owned is disposed of, a final determination can be made. As a result, under the passive activity loss rules, upon a fully taxable disposition, any overall

(Gain/loss) realized from the activity is recognized and can be offset against

(all active and portfolio/ only active income/ all income). Suspended credits can be offset against the tax attributable to(all active and portfolio/ only active income/ all income)

Unused credits are (lost/carried back/carried forward)

8.7.1