Problem 6-38 (LO. 5, 6, 10) In the current year, Abe gives an interest in a passive activity to his daughter, Andrea. The value of the interest at the date of the gift is $25,000, and its adjusted basis to Abe is $13,000. During the time that Abe owned the investment, losses of $3,000 could not be deducted because of the passive activity loss limitations. What is the tax treatment of the suspended passive activity losses to Abe and Andrea? In a disposition by gift of an interest in a passive activity, any suspended losses Andrea's basis in the property is $ Abe the basis of the property. Therefore, to deduct the suspended losses in the year of disposition.

Problem 6-38 (LO. 5, 6, 10) In the current year, Abe gives an interest in a passive activity to his daughter, Andrea. The value of the interest at the date of the gift is $25,000, and its adjusted basis to Abe is $13,000. During the time that Abe owned the investment, losses of $3,000 could not be deducted because of the passive activity loss limitations. What is the tax treatment of the suspended passive activity losses to Abe and Andrea? In a disposition by gift of an interest in a passive activity, any suspended losses the basis of the property. Therefore, Andrea's basis in the property is 5 - Abe to deduct the suspended losses in the year of disposition