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

Cal reported the following itemized deductions on his 2016 tax return.His AGI for 2016 was $85,000.The mortgage interest is all qualified mortgage interest to purchase his personal residence.For AMT,compute his total itemized deductions.

Heather purchased furniture and fixtures 7-year property)for her retail shop for $50,000.What is the AMT depreciation adjustment required in 2016 if the property was purchased in May 2016,assuming no bonus depreciation was taken?

In 2012,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): In 2016,what amount of income or loss will Lindsay report from this activity?

Gifts to charity are not allowed for AMT purposes.

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

Baxter invested $50,000 in an activity in 2012.At the beginning of 2014,Baxter's at-risk amount was $10,000.Baxter's share of losses from the activity were as follows: Year GainLoss) 2014 $25,000 ) 2015 10,000 2016 10,000 If you ignore the passive loss rules,how much income/loss will Baxter have from the activity in 2016?

An equipment leasing activity is not subject to the at-risk rules.

The initial amount considered at-risk is the cash plus the adjusted basis of property contributed to the activity plus certain borrowed amounts.

Clio's hot dog stand is only open during lunch on weekdays.In total,Clio,who is the sole owner and operator,worked 450 hours at the hot dog stand during the year.Clio is not considered a material participant with respect to the hot dog stand business.

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

Tax preference items for AMT:

Most real estate debt meets the requirements of qualified nonrecourse financing.

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.