Choice "c" is correct. The rule limiting the allowability of passive activity
losses and credits applies to personal service corporations.
Choice "a" is incorrect. The passive activity limitations apply to the
various partners in the partnership as opposed to the partnership
itself.
Choice "b" is incorrect. The passive activity limitations apply to the
various shareholders in the S corporation as opposed to the corporation
itself.
Choice "d" is incorrect. The passive activity rules do not apply to widely
held C corporations.
