Question

To date, Josh has had investments in only two passive activities. Activity A (acquired three years...

To date, Josh has had investments in only two passive activities. Activity A (acquired three years ago) produced tax losses totaling $40,000 in prior years and produces taxable income of $30,000 this year, while Activity B (acquired this year) has produced taxable income of $10,000 through the end of this year. Assuming no at-risk limitations apply, what is the total amount of Josh’s suspended passive activity losses after the end of this year? *Please include how you arrived at this answer*

a.         $0

b.         $10,000

c.         $20,000

d.         $40,000

e.         $60,000

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

As per IRS rules Passive losses can only be set off against passive income and can be carried froward if no passive income is there in current year or exceed passive income in current year without any limitation.

Passive loss can be set off against the passive income from any source and not necessary from source which loss was generated.

Suspende activity loss after end of year=Loss from prior years-Passive income from activity A-Passive income from activity B

=$40,000-$30,000-$10,000

Suspende activity loss at end of year=$0

Correct option is a.) $0

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Several years ago, Snoopy acquired a passive activity. Until 2017, the activity was profitable. Snoopy’s at-risk...
Several years ago, Snoopy acquired a passive activity. Until 2017, the activity was profitable. Snoopy’s at-risk amount at the beginning of 2017 was $238,500. The activity produced losses of ($100,000) in 2017, ($80,000) in 2018, and ($90,000) in 2019. During the same period, no passive activity income was recognized. How much of these losses are suspended under the at-risk rules at the end of 2019? How much of these losses are suspended under the passive activity loss rules at the...
Leon sells his interest in a passive activity for $224,000. Determine the tax effect of the...
Leon sells his interest in a passive activity for $224,000. Determine the tax effect of the sale based on each of the following independent facts: If an amount is zero, enter "0". a. Adjusted basis in this investment is $78,400. Losses from prior years that were not deductible due to the passive activity loss restrictions total $86,240. The (taxable gain/ or Deductible Loss) is $. The suspended losses at the end of the year are $. Feedback When a taxpayer...
Nell earns $50,000 salary income in the current year. In addition, Nell sells a passive activity...
Nell earns $50,000 salary income in the current year. In addition, Nell sells a passive activity with an adjusted basis of $45,000 for $155,000 in the current year. Suspended losses attributable to this property total $45,000. Nell owns another separate passive activity which has $10,000 passive loss for the current year and $80,000 suspended passive losses from prior years. Nell will report the following on her current year income tax return (as a result of just these transactions): a. $$50,000...
Nell earns $50,000 salary income in the current year.  In addition, Nell sells a passive activity with...
Nell earns $50,000 salary income in the current year.  In addition, Nell sells a passive activity with an adjusted basis of $45,000 for $155,000 in the current year. Suspended losses attributable to this property total $45,000. Nell owns another separate passive activity which has $10,000 passive loss for the current year and $80,000 suspended passive losses from prior years.  Nell will report the following on her current year income tax return (as a result of just these transactions): a. $$50,000 salary income...
Molly Grey (single) acquired a 30 percent limited partnership interest in Beau Geste LLP several years...
Molly Grey (single) acquired a 30 percent limited partnership interest in Beau Geste LLP several years ago for $61,000. At the beginning of year 1, Molly has tax basis and an at-risk amount of $32,500. In year 1, Beau Geste incurs a loss of $194,500 and does not make any distributions to the partners. In year 1, Molly's AGI (excluding any income or loss from Beau Geste) is $67,000. This includes $17,600 of passive income from other passive activities. In...
Molly Grey (single) acquired a 30 percent limited partnership interest in Beau Geste LLP several years...
Molly Grey (single) acquired a 30 percent limited partnership interest in Beau Geste LLP several years ago for $63,000. At the beginning of year 1, Molly has tax basis and an at-risk amount of $22,500. In year 1, Beau Geste incurs a loss of $188,500 and does not make any distributions to the partners. In year 1, Molly's AGI (excluding any income or loss from Beau Geste) is $64,400. This includes $14,400 of passive income from other passive activities. In...
-Masoud’s records reflect the following information: 1. Paid $400 dues to a fraternal organization (such as...
-Masoud’s records reflect the following information: 1. Paid $400 dues to a fraternal organization (such as the Elks Club). 2. Donated stock having a fair market value of $5,000 to a qualified charitable organization. He purchased the stock 3 years earlier for $2,500. 3. Paid $1,500 cash to qualified public charitable organizations. Masoud's adjusted gross income for this year was $50,000. What is the amount of his charitable contribution deduction for the year? A) $2,500 B) $4,000 C) $5,000 D)...
Molly Grey (single) acquired a 30 percent limited partnership interest in Beau Geste LLP several years...
Molly Grey (single) acquired a 30 percent limited partnership interest in Beau Geste LLP several years ago for $65,000. At the beginning of year 1, Molly has tax basis and an at-risk amount of $31,000. In year 1, Beau Geste incurs a loss of $227,100 and does not make any distributions to the partners. In year 1, Molly's AGI (excluding any income or loss from Beau Geste) is $62,000. This includes $17,300 of passive income from other passive activities. In...
2 . Identify which of the following statements is true: If an S Corporation has no...
2 . Identify which of the following statements is true: If an S Corporation has no accumulated earnings and profits, the amount distributed to a shareholder will not increase the shareholder's basis in the stock        If a C Corporation does not distribute its income to its shareholders, double taxation of the income will occur.        C Corporation operating losses are deductible by the individual shareholders        S Corporation operating losses are never deductible by the individual...
On January 1, 2013, Starbucks acquired 100% of Dunkin. On this date: Starbucks acquired 100% of...
On January 1, 2013, Starbucks acquired 100% of Dunkin. On this date: Starbucks acquired 100% of Dunkin’s outstanding common stock for $842,000 in cash. Dunkin’s Buildings had a FV in excess of BV of $72,000 and remaining Useful Life was 12 years. Dunkin’s Equipment had a FV in excess of BV of $10,000 and remaining Useful Life was 10 years. Dunkin had an unrecorded Patent with a FMV $20,000 and remaining Useful Life was 20 years. Dunkin’s Stockholder’s Equity total...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT