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Nereida is invested in two different passive activities, Activity Red and Activity Blue. Her beginning basis in Activity Red is $15,000 and Activity Blue is

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Nereida is invested in two different passive activities, Activity Red and Activity Blue. Her beginning basis in Activity Red is $15,000 and Activity Blue is $5,000. She contributed additional cash of $3,000 to Activity Blue during the year. Activity Red generated a loss of ($20,000) this year while Activity Blue generated income of $4,000. Hov much income or loss should Nereida recognize this year with respect to these two activities? Recognize loss of ($20,000) for Activity Red and income of $4,000 for Activity Blue. Nereida does not recognize any income or loss this year. Recognize loss of ($15,000) for Activity Red and income of $12,000 for Activity Blue. Recognize loss of ($4,000) for Activity Red and income of $4,000 for Activity Blue. None of the choices are correct

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