AICPA Exam CPA-Regulation Topic 3 Question 11 Discussion

Actual exam question for AICPA's CPA-Regulation exam

Question #: 11
Topic #: 3

[All CPA-Regulation Questions]

The rule limiting the allowability of passive activity losses and credits applies to:

APartnerships.

BS corporations.

CPersonal service corporations.

DWidely-held C corporations.

Show Suggested Answer

Suggested Answer: C

Choice 'c' is correct. The rule limiting the allowability of passive activity losses and credits applies to personal service corporations.

Choice 'a' is incorrect. The passive activity limitations apply to the various partners in the partnership as opposed to the partnership itself.

Choice 'b' is incorrect. The passive activity limitations apply to the various shareholders in the S corporation as opposed to the corporation itself.

Choice 'd' is incorrect. The passive activity rules do not apply to widely-held C corporations.

by Dominque at May 06, 2022, 10:18 PM

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