Exam 13: At-Riskpassive Activity Loss Rules and the Individual Alternative Minimum Tax

Baxter invested $50,000 in an activity in 2013.At the beginning of 2015,Baxter's at-risk amount was $10,000.Baxter's share of losses from the activity were as follows: Year Gain(Loss) 2015 (\ 25,000 2016 10,000 2017 10,000 If you ignore the passive loss rules,how much income/loss will Baxter have from the activity in 2017?

Which of the following itemized deductions is not allowed for AMT?

Baird has four passive activities.The following income and losses are generated in the current year. $\begin{array}{lll}\text { Year }&\text { Gain (Loss) }\\\mathrm{A} & \$ (40,000)\\\mathrm{B} & \$ (15,000)\\\mathrm{C} & \$ (25,000) \\\mathrm{D} & \$ 20,000\\\text { Total }&\$(60,000)\end{array}$ How much of the $60,000 net passive loss can Baird deduct this year? Calculate the suspended losses (by activity).

The general rule concerning passive losses is that passive activity losses can only be deducted to the extent of passive and portfolio income.

The AMT tax rate for individuals is 20%.

In 2013,Lindsay's at-risk amount was $50,000 at the beginning of the year.Lindsay's shares of income and losses from the activity were as follows (ignore passive loss rules): Year Gain (Loss) 2013 \ (60,000) 2014 \ (40,000) 2015 \ (20,000) 2016 \ 40,000 2017 \ 40,000 In 2017,what amount of income or loss will Lindsay report from this activity?

In 2017,Ethan contributes cash of $50,000 and property with a fair market value of $100,000 and basis of $20,000 in exchange for a 20% interest in the EFP Partnership.The partnership is not a passive activity.For 2017,his share of partnership items were an ordinary loss of $80,000,interest income of $2,000,dividends of $5,000,and capital gains of $4,000.How much of the current year loss is deductible by Ethan and what is Ethan's at-risk amount on December 31,2017?

The IRC require income/loss items to be separated into two categories: active income/loss and passive income/loss.

Stuart owns a 20% interest in a partnership (not involved in real estate)in which his at-risk amount was $18,000 at the beginning of the year.The partnership produces a $50,000 loss for the year.What is Stuart's at-risk amount at the end of the year?

After computing all tax preferences and AMT adjustments,Adam and his wife Cindy have AMTI of $290,000.If Adam and Cindy file a joint tax return,what exemption amount can they claim for AMT for 2017?

Libby owns and operates Mountain View Inn,a bed and breakfast.Libby's inn is not considered a passive activity.

Randall invested $200,000 in Activity A and $100,000 in Activity B (both passive)in 2003.At the beginning of 2017,Randall's at-risk amount was $20,000 in A and $15,000 in B.Activity A had a loss of $25,000 and Activity B had income of $30,000.What is the amount of income or loss recognized in 2017 from these activities?

A loss must first be allowed under the passive activity loss rules and then must pass through the at-risk rules in order to ultimately be deducted on the tax return.

Claudia invested $50,000 cash in the C&S General Partnership and received a 20% interest.The partnership borrowed $200,000 of full recourse debt from a local bank.Assuming that Claudia is personally liable for $40,000 if the partnership defaults on the loan,what is Claudia's at-risk amount before considering any partnership income or loss?

Jordan purchased a warehouse for $600,000.$100,000 of the cost was properly allocated to the land. a.If the property was purchased in April of 1998,what is the AMT depreciation adjustment required in 2017? b.If the property was purchased in April of 2017,what is the AMT depreciation adjustment required in 2017?

Cal reported the following itemized deductions on his 2017 tax return.His AGI for 2017 was $85,000.The mortgage interest is all qualified mortgage interest to purchase his personal residence.For AMT,compute his total itemized deductions. Medical expenses (after the 10.0\% of AGI floor) 8,000 State income taxes 5,100 Home mortgage interest 13,500 Charitable contributions 4,200 Miscellaneous itemized deductions (after the 2\% of AGI floor) 2,800

After computing all tax preferences and AMT adjustments,Peter has AMTI of $210,000 in 2017.If Peter is single,what exemption amount can he claim for AMT in 2017?

Which of the following increases the taxpayer's at-risk amount?

If a limited partner materially participates in the trade or business of a limited partnership,the passive loss rules still apply.

Rene owns four small businesses.Rene spends the following number of hours this year working in those businesses: Business A,105 hours;Business B,130 hours;Business C,120 hours;Business D,99 hours.Which of the following statements is correct?