Question 57 of 75. When a taxpayer sells or otherwise disposes of rental property, how are any unallowed, prior-year, passive-activity losses treated? They become nonpassive losses and may be used to reduce both passive and nonpassive income in the year of disposition They may be used to reduce up to $3,000 of ordinary income, then carried forward to future tax years and used to reduce up to $3,000 of ordinary income each year until the entire loss is depleted, They may be used to reduce passive income in the year of disposition, but any remaining losses will be permanently disallowed They may be used to reduce passive income in the year of disposition. Any unused amount must be carried forward and can only be used to offset passive income in future tax years Mark for follow up Question 58 of 75. In April 2018, Miguel purchased a new refrigerator for $700 and placed it in service in his rental house. He elected not to claim the special depreciation allowance. Miguel sold the rental house, including the refrigerator, in November 2020. After factoring in depreciation, his adjusted basis in the refrigerator at the time of sale was $323. Under what property section of the Internal Revenue Code will the sale of the refrigerator fall? Section 179. Section 1245 Section 1250 Section 1255