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Problem - 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?
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