Exercise $3-26($Algorithmic$)($L$0.1)$

Hummingbird Corporation, a closely held C corporation that is not a PSC$,$ has $$132,500$ of net active income, $$53,000$ of portfolio

income, and a $$145,750$ loss from a passive activity.

Compute Hummingbird's taxable income for the year.

$

Feedback

Check My Work

The passive activity loss rules apply to individual taxpayers and to closely held C corporations and personal service corporations $($PS

corporations and partnerships, passive income or loss flows through to the owners, and the passive activity loss rules are applied

owner level.