A taxpayer participated in two separate business activities. Business A is the taxpayer's principal business in whose day-to-day operations the taxpayer is regularly involved. The taxpayer did not materially participate in Business B. The taxpayer had the following income (loss) and deductions in the tax year:
Description
Amount
Business A
$40,400
Business B
(8,000)
Disposition of royalty-producing asset
(2,500)
Salary
110,000
Dividends
5,800
What is the amount of total losses from passive activities for the year that will be carried forward for future use?
A.
$2,500
B.
$10,500
C.
$8,000
D.
$4,700