[jeff]

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Jeff Elliott, CPA (KS) | Another71 | NINJA CPA | NINJA CMA | NINJA CPE

[Anonymous]

This may be worth going over for the small details (at least for me!) https://www.irs.gov/publications/p925/ar02.html#en_US_2012_publink1000104595.

[Anonymous]

This may be worth going over for the small details (at least for me!) https://www.irs.gov/publications/p925/ar02.html#en_US_2012_publink1000104595.

[Kenada]

In the current year, a taxpayer reports the following items:

Salary

$50,000

Income from partnership A, in which the taxpayer materially participates

20,000

Passive activity loss from partnership B

(40,000)

During the year, the taxpayer disposed of the interest in partnership B, which had a suspended loss carryover of $10,000 from prior years. What is the taxpayer’s adjusted gross income for the current year?

A. $60,000

B. $20,000

C. $30,000

D. $70,000

FAR 05/27/14; 786/110 - Done !

[Kenada]

In the current year, a taxpayer reports the following items:

Salary

$50,000

Income from partnership A, in which the taxpayer materially participates

20,000

Passive activity loss from partnership B

(40,000)

During the year, the taxpayer disposed of the interest in partnership B, which had a suspended loss carryover of $10,000 from prior years. What is the taxpayer’s adjusted gross income for the current year?

A. $60,000

B. $20,000

C. $30,000

D. $70,000

FAR 05/27/14; 786/110 - Done !

[Kenada]

Answer (B) is correct.

The salary and income from partnership A are taxable. The amount of a loss attributable to a person’s passive activities is allowable as a deduction only to the extent of income attributable to passive activities. However, suspended and current-year losses from passive activities become deductible in full in the year the taxpayer completely disposes of all interest in the passive activity. Therefore, the $40,000 passive activity loss from partnership B and the suspended loss carryover of $10,000 are fully deductible. The taxpayer’s AGI is

Salary$50,000

Income from partnership A20,000

Less: passive activity loss from partnership B(40,000)

Less: suspended loss carryover(10,000)

AGI$20,000

FAR 05/27/14; 786/110 - Done !

[Kenada]

Answer (B) is correct.

The salary and income from partnership A are taxable. The amount of a loss attributable to a person’s passive activities is allowable as a deduction only to the extent of income attributable to passive activities. However, suspended and current-year losses from passive activities become deductible in full in the year the taxpayer completely disposes of all interest in the passive activity. Therefore, the $40,000 passive activity loss from partnership B and the suspended loss carryover of $10,000 are fully deductible. The taxpayer’s AGI is

Salary$50,000

Income from partnership A20,000

Less: passive activity loss from partnership B(40,000)

Less: suspended loss carryover(10,000)

AGI$20,000

FAR 05/27/14; 786/110 - Done !

[Skrier]

IY247…the correct answer is B. $20,000. Passive activity losses and suspended losses are fully deductible against ordinary income in the year of disposal.

AUD- 84
FAR- 75
REG- 78...I am DONE!!!
BEC- 79

[Skrier]

IY247…the correct answer is B. $20,000. Passive activity losses and suspended losses are fully deductible against ordinary income in the year of disposal.

AUD- 84
FAR- 75
REG- 78...I am DONE!!!
BEC- 79

[Mehwish]

Hi,

I need an explaination for a question from Wiley Review

It's from Module 35, # 150. Topic is Miscellaneous Deductions

“JR is an outside salesman, deriving his income solely from commissions, and personally bearing all expenses without reimbursement of any kind. During 2012, Joel paid the following expenses pertaining directly to his activities as an outside salesman:

Travel $10000

Secreterial $7000

Telephone 1000

How should these expenses be deducted in JR's 2012 return?

=From Gross income in arriving at AGI As Itemized deductions

A. 18,000 0

B. 11000 7000

C10,000 8000

D. 0 18,000

The correct answer is D. From gross income, in arriving at AGI ($0), and as Itemized deductions (18000).

I realize all the items are deductible. But aren't miscellaneous deductions subject to 2% AGI rule? Doesn't that mean the deductions have to exceed at least 2% of income for them to be deducible?

So in this case, Wouldn't choice A be right? The deductions are equal to the AGI, therefor allowing no itemized deduction.

[Mehwish]

Hi,

I need an explaination for a question from Wiley Review

It's from Module 35, # 150. Topic is Miscellaneous Deductions

“JR is an outside salesman, deriving his income solely from commissions, and personally bearing all expenses without reimbursement of any kind. During 2012, Joel paid the following expenses pertaining directly to his activities as an outside salesman:

Travel $10000

Secreterial $7000

Telephone 1000

How should these expenses be deducted in JR's 2012 return?

=From Gross income in arriving at AGI As Itemized deductions

A. 18,000 0

B. 11000 7000

C10,000 8000

D. 0 18,000

The correct answer is D. From gross income, in arriving at AGI ($0), and as Itemized deductions (18000).

I realize all the items are deductible. But aren't miscellaneous deductions subject to 2% AGI rule? Doesn't that mean the deductions have to exceed at least 2% of income for them to be deducible?

So in this case, Wouldn't choice A be right? The deductions are equal to the AGI, therefor allowing no itemized deduction.

[Mehwish]

@IY247, What if it wasn't the year of disposal? How would you calculate the loss from this year and the carry over from the previous year fir the current taxable income?

[Mehwish]

@IY247, What if it wasn't the year of disposal? How would you calculate the loss from this year and the carry over from the previous year fir the current taxable income?

[Kenada]

If it was not the year of disposal, you carry forward the losses from Passive activity until you have a income from Passive activities to offset it.

FAR 05/27/14; 786/110 - Done !

[Kenada]

If it was not the year of disposal, you carry forward the losses from Passive activity until you have a income from Passive activities to offset it.

FAR 05/27/14; 786/110 - Done !

[UCMCPA]

and if he didn't dispose of it… would the income from partnership A of 20,000 be offset by the loss from partnership B?

FAR - 84
AUD - 94
REG - 86
BEC - 86

[Author]

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