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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 end of 2019?

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Answer #1

Losses are suspended under the at-risk rules at the end of 2019 = $31,500 ($238,500 of the losses are reclassified as passive and suspended because no passive income was recognized during the period. $238,500 losses - $270,000 ($100,000 + $80,000 + $90,000) reclassified as passive = $31,500 losses suspended under the at-risk rules.

Losses are suspended under the passive activity loss rules at the end of 2019 = $238,500 of the losses are reclassified as passive and suspended because no passive income was recognized during the period

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