Sarah has investments in four passive activity partnerships purchased several years ago. Last year the income and losses were as follows:
Activity |
Income (Loss) |
A |
$ 30,000 |
B |
(30,000) |
C |
(15,000) |
D |
(5,000) |
In the current year, she sold her interest in Activity D for a $10,000 gain. Activity D, which had been profitable until last year, had a current loss of $1,500. How will the sale of Activity D affect Sarah’s taxable income in the current year?