Reva gave her daughter a passive activity last year that had an adjusted basis of $75,000. The activity had suspended losses of $35,000 and a fair market value of $120,000. In the current year, her daughter realized income of $18,000 from the passive activity. What is the tax effect on Reva and her daughter?

Reva Basis of passive activity Passive income Gift tax consideration Daughter $ 110,000 $ 18,000 0 es