Ray owns a business with two separate departments. Department A produces $100,000 of income and Department B incurs a $60,000 loss. Ray participates for 550 hours in Department A and 100 hours in Department B. He has full-time employees in both departments. Which of the following statements is correct?

Group of answer choices

If Ray elects to treat both departments as a single activity, he can offset the $60,000 loss against the $100,000 income.

If Ray elects to treat the two departments as separate activities, he can offset the $60,000 loss against the $100,000 income.

If Ray elects to treat both departments as a single activity, he cannot offset the $60,000 loss against the $100,000 income.

none of the above