Exam 7: Losses-Deductions and Limitations

Anna owns a passive activity that has a basis of $30,000 and a suspended loss of $7,000.Anna gifts the passive activity to her daughter Patricia when the property has a fair market value of $42,000. I.Anna will report an ordinary loss of $7,000. II.Patricia's basis in the passive activity is $30,000. ​

A closely held corporation cannot offset net passive losses against income of the business.

A taxpayer had the following for the current year: ​ I.If the taxpayer is a closely held corporation,taxable income from the three activities is income of $6,000. II.If the taxpayer is an individual and the passive income is not related to a rental real estate activity,taxable income is $36,000. ​

Ricardo owns interests in 3 passive activities: A,B,and C.During the current year,activity A realizes income of $8,000 while activities B and C realize losses of $16,000 and $24,000,respectively.Determine the amount of suspended loss attributable to activity C.

All of the following are capital assets,except

During the current year,Alyssa incurred a net loss of $27,500 from a 5 percent interest in a partnership that operated and managed an office building.Alyssa had adjusted gross income from other sources of $110,000 and spent 67 hours assisting in the management of the building.Determine Alyssa's total adjusted gross income for the current year.

Billingsworth Corporation has the following net capital gains and losses for 2013 through 2016.Billingsworth' marginal tax rate is 34% for all years. ​ In 2016,Billingsworth Corporation earned net operating income of $30,000.What is/are the tax effect(s)of the $9,000 net capital loss in 2016? I.Corporate taxable income is $21,000. II.The net capital loss will provide income tax refunds totaling $3,060. ​

"Active participation" and "real estate professional" are both exceptions to the general rule for passive activity losses with rental real estate. I.A taxpayer qualifying under both exceptions is limited to a maximum annual deduction of $25,000. II.Active participation results from owning at least a 10% interest in the activity and arranging for repairs and maintenance and collecting rents. ​

Which of the following events is a "casualty" loss? I.Lightning damage. II.Loss of the topsoil on a farm from a flood. ​

During the year,Aimee reports $30,000 of active business income,$15,000 of income from passive activity X,and a $25,000 loss from passive activity Y.Determine the tax consequences of these events. I.The $15,000 income from activity X can offset $15,000 of the loss from activity Y. II.Any passive loss that is not deducted in the current year is suspended. ​

A taxpayer has the following income (losses)for the current year: ​ What is the taxable income (loss)of the taxpayer if: a.The taxpayer is a publicly held corporation? b.The taxpayer is a closely held corporation? c.The taxpayer is an individual and the passive income is not from a rental activity? d.The taxpayer is an individual and the passive income is the result of a rental activity for which the taxpayer qualifies as a real estate professional. e.The taxpayer is an individual and the passive income is the result of a rental activity for which the taxpayer fails to qualify as a real estate professional but meets the active participation test?

Leon is allowed to deduct all the current and suspended losses on his passive activity if he sells his entire interest in the passive activity during the year.

Dwight owns an apartment complex that has a $30,000 loss.His adjusted gross income is $85,000 before the loss.Since he qualifies as an active participant he may deduct $25,000.

Susan is the owner of a 35-unit apartment complex.She spends 950 hours a year managing the property.In addition,she works part-time for a mortgage company.She spends 1,150 hours a year as a bookkeeper at the mortgage company.The apartment complex generated a loss of $32,000,and Susan's adjusted gross income for the current year,before considering the apartment complex,is $48,000.How much of the loss can Susan deduct?

Sullivan,a pilot for Northern Airlines,has adjusted gross income of $92,000 before considering the following losses.The passive activity rules disallow the deduction for a loss in which of the following? I.Sullivan has a $4,500 loss from his ownership interest in Cowco,a feeder-cattle limited partnership.Sullivan is a general partner and is responsible for day-to-day management decisions. II.Sullivan has a $7,000 loss from his ownership interest in Swineco,a feeder-pig limited partnership.Sullivan is a limited partner. ​

Janine is an engineering professor at Southern College.Her annual salary is $110,000.She owns two 3-unit apartment buildings near the university.Because of the proximity to campus,Janine actively manages the property.During the current year,the rental of the property produced a $29,500 loss.How much of the loss may Janine deduct for the current year?

Rose has an adjusted gross income of $130,000.Not included in her adjusted gross income is a $15,000 loss from a passive activity.Which of the following statements regarding the effect of the passive loss on his adjusted gross income is/are correct? I.If the activity is rental real estate and Rose meets the real estate professional exception,she can deduct the $15,000 loss for adjusted gross income. II.If the activity is rental real estate and Rose is an active participant,she can deduct $5,000 of the loss for adjusted gross income. ​

During 2016,Pamela worked two "jobs." She performed financial consulting activities for 1,000 hours and real estate development and rental activities for 1,200 hours.Her real estate development and rental activities produced a loss of $35,000.Her financial consulting generated a net business income of $40,000.How much of the loss can Pamela deduct against her financial consulting income?

The wash sale provisions apply to which of the following? I.Tom realizes an $8,000 loss on the June 17,2016,sale of 650 shares of Roadrunner Corporation common stock.He replaces the 650 shares with Hawke Inc.,stock on July 8,2016. II.Rosie realizes a $6,000 loss on the December 29,2015,sale of 40 Billings corporate bonds.Each bond has a face value of $1,000.She replaces the Billings corporate bonds with 30 Redeemer corporate bonds,each with a face value of $1,000 on January 16,2016.The Redeemer bonds have the same interest rate,maturity date,but a different bond rating (AAA)as the Billings bonds. ​

Match each statement with the correct term below. -Net operating loss