Sarah owns a passive activity that has a suspended loss of $18,000. The activity has a fair market value of $35,000 and her adjusted basis in the activity is $20,000.

I.	If Sarah sells the activity, she is allowed to deduct the $18,000 suspended loss.
II.	If Sarah gifts the activity, she is only be allowed to deduct $15,000 of the suspended loss.

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

Test bank 2016 says the answer is (b) But my textbook (2019) says " donor is not allowed any deductions for the suspended loss. Suspended loss becomes part of donee's basis in the asset" What is the updated answer for this question? Is this answer still correct? Please help! Thank you