Jeremy owns a passive activity that has a basis of $$30,000$ and a suspended loss of $$16,000.$ His taxable income from active and portfolio income is $$81,000.$

What is the effect on Jeremy's taxable income if he sells the passive activity for

a$.$ $$37,000$ : Jeremy has a capital gain of $ $$ on the sale of the activity and a deduction of $$16,000$ for the suspended loss on the activity. This results in a net deduction of $ $$

b$.$ $$25,000$ : Jeremy has a $ $$ capital loss on the sale of the passive activity and i $$ allowed a deduction for the $$16,000$ suspended loss.