Question 1

Sandra acquired a passive activity three years ago.Until last year,the activity was profitable and her at-risk amount was $300,000.Last year,the activity produced a loss of $100,000,and in the current year,the loss is $50,000.Assuming Sandra has received no passive income in the current or prior years,her suspended passive loss from the activity is:

Accepted Answer

A)   $90,000 from last year and $50,000 from the current year.
B)   $100,000 from last year and $50,000 from the current year.
C)   $0 from last year and $0 from the current year.
D)   $50,000 from the current year.
E)   None of the above.F) A) and D)
G) A) and C)

Question 2

Paula owns four separate activities.She elects not to group them together as a single activity under the "appropriate economic unit" standard.Paula participates for 130 hours in Activity A,115 hours in Activity B,260 hours in Activity C,and 100 hours in Activity D.She has one employee,who works 125 hours in Activity D.Which of the following statements is correct?

Accepted Answer

A)  Activities A,B,C,and D are all significant participation activities.
B)  Paula is a material participant with respect to Activities A,B,C,and D.
C)  Paula is not a material participant with respect to Activities A,B,C,and D.
D)  Losses from all of the activities can be used to offset Paula's active income.
E)  None of the above.F) All of the above
G) B) and D)

Question 3

Wes's at-risk amount in a passive activity is $25,000 at the beginning of the current year.His current loss from the activity is $35,000 and he has no passive activity income.At the end of the current year,which of the following statements is incorrect?

Accepted Answer

A)   Wes has a loss of $25,000 suspended under the passive loss rules.
B)   Wes has an at-risk amount in the activity of $0.
C)   Wes has a loss of $10,000 suspended under the at-risk rules.
D)   Wes has a loss of $35,000 suspended under the passive loss rules.
E)   None of the above is incorrect.F) C) and D)
G) D) and E)

Question 4

Art's at-risk amount in a passive activity was $60,000 at the beginning of 2011.His loss from the activity in 2011 is $80,000,and he had no passive activity income during the year.Art had $20,000 of passive income from the activity in 2012.Under the passive loss rules,Art's suspended loss at the end of 2012 is:

Accepted Answer

A)   $15,000.
B)   $20,000.
C)   $45,000.
D)   $60,000.
E)   None of the above.F) A) and B)
G) B) and D)

Question 5

Tonya owns an interest in an activity (not real estate)that converted recourse financing to nonrecourse financing.Recapture of previously allowed losses is required if Tonya's at-risk amount is reduced below zero as a result of the debt restructuring.

Accepted Answer

A) True 
 B)False

Exam 11: Investor Losses

Tonya owns an interest in an activity (not real estate)that converted recourse financing to nonrecourse financing.Recapture of previously allowed losses is required if Tonya's at-risk amount is reduced below zero as a result of the debt restructuring.

Correct Answer
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Wes's at-risk amount in a passive activity is $25,000 at the beginning of the current year.His current loss from the activity is $35,000 and he has no passive activity income.At the end of the current year,which of the following statements is incorrect?

Correct Answer
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Correct Answer
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Correct Answer
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Exam 11: Investor Losses

Tonya owns an interest in an activity (not real estate)that converted recourse financing to nonrecourse financing.Recapture of previously allowed losses is required if Tonya's at-risk amount is reduced below zero as a result of the debt restructuring.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Wes's at-risk amount in a passive activity is $25,000 at the beginning of the current year.His current loss from the activity is $35,000 and he has no passive activity income.At the end of the current year,which of the following statements is incorrect?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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