Federal Taxation Chapter 11 Practice Questions with Complete Solutions Rated A+ (100% Correct)
1 view 0 purchase
Course
Federal Taxation Chapter 11
Institution
Federal Taxation Chapter 11
Federal Taxation Chapter 11 Practice Questions with Complete Solutions Rated A+ (100% Correct)
what happens if passive losses exceed passive income - Answers the excess losses are suspended and carried forward to the next year
for tax planning can you use passive losses to offset active income - ...
Federal Taxation Chapter 11 Practice Questions with Complete Solutions Rated A+ (100% Correct)
what happens if passive losses exceed passive income - Answers the excess losses are suspended and
carried forward to the next year
for tax planning can you use passive losses to offset active income - Answers no
when receiving a passive activity gift with inherited suspended losses, what is the procedure - Answers
to use those inherited losses to offset future passive income up to the loss amount
what is deductibility of investment interest limited to - Answers it is limited to the amount of net
investment income
what threshold makes an activity a 'significant activity' - Answers 100 hours
At risk limitation example - Answers Now consider a more complex situation, where there is debt
involved and the investor is not personally liable for it:
Sally invests $100,000 in a partnership. However, the partnership borrows $200,000 from a bank, and
Sally is not personally liable for the loan.
Sally's initial at-risk amount is $100,000, since she is only at risk for the amount of her own investment,
not the loan the partnership took out.
The partnership incurs a loss of $150,000 in a year.
Since Sally's at-risk amount is only $100,000, she can only deduct $100,000 of the loss.
The remaining $50,000 of the loss is carried forward to future years, to be deducted when Sally has
more at-risk capital (such as additional contributions or if the partnership generates income).
recourse vs nonrecourse debt - Answers recourse debt means you are personally liable and need to
count the amount towards your at risk amount
decreases to tax payer at-risk amount - Answers - Withdrawals from the activity.
- Taxpayer's share of the activity's deductible loss.
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller TutorJosh. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $8.19. You're not tied to anything after your purchase.
