FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 11: Investor Losses

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 61

Multiple Choice

Review LaterAdd Note

Review Later

Leigh,who owns a 50% interest in a sporting goods store,was a material participant in the activity for the last fifteen years.She retired from the sporting goods store at the end of last year and will not participate in the activity in the future.However,she continues to be a material participant in an office supply store in which she is a 50% partner.The operations of the sporting goods store resulted in a loss for the current year and Leigh's share of the loss is $40,000.Leigh's share of the income from the office supply store is $75,000.She does not own interests in any other activities.

A) Leigh cannot deduct the $40,000 loss from the sporting goods store because she is not a material participant.
B) Leigh can offset the $40,000 loss from the sporting goods store against the $75,000 of income from the office supply store.
C) Leigh will not be able to deduct any losses from the sporting goods store until future years.
D) Leigh will not be able to deduct any losses from the sporting goods store until she has been retired for at least four years.
E) None of the above.

F) B) and D)
G) C) and D)

Correct Answer

verified

Show Answer

Question 62

Essay

Review LaterAdd Note

Review Later

Describe the types of activities and taxpayers that are subject to the at-risk rules.

Correct Answer

verified

The at-risk provisions limit the deducti...

View Answer

Show Answer

Question 63

Multiple Choice

Review LaterAdd Note

Jon owns an apartment building in which he is a material participant and also owns a computer consulting business.Of the 2,000 hours he spends on these activities during the year,55% of the time is spent operating the apartment building and 45% of the time is spent in the computer consulting business.

Services performed by an employee are treated as being related to a real estate trade or business if the employee performing the services has more than a 5% ownership interest in the employer.

Wayne owns a small apartment building that produces a $45,000 loss during the year.His AGI before considering the rental loss is $85,000.Because Wayne is an active participant with respect to the rental activity,he may deduct the $45,000 loss.

Pat sells a passive activity for $100,000 that has an adjusted basis of $55,000.During the years of her ownership,$60,000 of losses have been incurred that were suspended under the passive activity loss rules.In addition,the passive activity generated tax credits of $10,000 that were not utilized and suspended.Determine the tax treatment to Pat on the disposition of the property.

Which of the following is not a factor that should be considered in determining whether an activity is treated as an appropriate economic unit?

Judy owns a 20% interest in a partnership (not real estate) in which her at-risk amount was $35,000 at the beginning of the year.The partnership borrowed $50,000 on a recourse note and made a $40,000 profit during the year.Her at-risk amount at the end of the year is $43,000.

Anne sells a rental house for $100,000 (adjusted basis of $55,000).During her ownership,$60,000 of losses have been suspended under the passive activity loss rules.Determine the tax treatment to Anne on the disposition of the property.

Kim dies owning a passive activity with a basis of $75,000,a fair market value of $140,000,and suspended losses of $80,000.All of the $80,000 passive activity loss can be deducted on Kim's final income tax return.

In 2016,Kelly earns a salary of $200,000 and invests $40,000 for a 20% interest in a partnership not subject to the passive activity loss rules.Through the use of $800,000 of nonrecourse financing,the partnership acquires assets worth $1 million.The activity produces a loss of $150,000,of which Kelly's share is $30,000.In 2017,Kelly's share of the loss from the partnership is $15,000.How much of the loss from the partnership can Kelly deduct?