Salvador owns a passive activity that has a basis of $44,000 and a suspended loss of $18,000. Salvador's taxable income from active and portfolio income is $55,000. If Salvador's sells the passive activity for $56,000 how will he report the transaction on his tax return?

I.	Salvador will report an ordinary loss of $18,000.
II.	Salvador will report a capital gain of $12,000.

	a.	Only statement I is correct.
	b.	Only statement II is correct.
	c.	Both statements are correct.
	d.	Neither statement is correct.

According to the test bank 2016 the correct answer is (c).

My textbook states "any suspended loss on the activity is deductible in the year of sale against portfolio and active income" so is this answer correct based on 2019 tax law?

I am getting confused... Please help! Thank you