Passive Activity And At-Risk Rules - Answer Key

1. C

Because Walter is a material participant, he can deduct $30,000 of the loss against his initial investment in the first year. The remaining $10,000 loss can be carried forward and used when the "at-risk" provisions allow the deduction.

2.
A

Julie has AGI exceeding the $150,000 phase out limits; therefore, none of the loss is deductible.

3.
A

Losses from non-publically traded partnerships cannot be used to offset income from publically traded partnerships.

4.
C

Because Barbara's investment in the passive activity was $50,000, she will have a $50,000 suspended loss under the passive loss rules. The remaining $20,000 falls under the at-risk rules. Introduction

You May Also Like

Related Articles
  1. Trading Strategies

    The Pros & Cons Of Being A Trader On ...

  2. Trading Strategies

    What To Do With Stocks That Hit All-Time ...

  3. Trading Strategies

    Understanding The Price Vs. Time Equation

  4. Chart Advisor

    3 Commodity Stocks Poised For A Move ...

  5. Personal Finance

    How To Calculate Beta Of A Private Company

Trading Center