2) In the current year, Joel has a passive activity loss of $15,000 from a limited partnership interest in XYZ, LP. He also has suspended losses from XYZ from prior years of $40,000. At the end of the current year, Joel sells his entire interest in XYZ at a $50,000 gain. What is the net effect of these items on his current year adjusted gross income?

1. $5,000 decrease
2. $50,000 increase
3. $35,000 increase
4. $10,000 increase
5. $0

5) In the current year, Gail sold her rent house to Robert. Her CPA tells her that she should be able to report the gain from the sale under the installment sales rules since she received two payments from Robert after

1. The close of the tax year
2. The date of the sale
3. The close of the transaction
4. The down payment is received