Question

Problem 11-43 (LO. 3) Sarah has investments in four passive activity partnerships purchased several years ago. Last year the income and losses were as follows: Activity Income (Loss) $30,000 (30,000) (15,000) (5,000) In the current year, she sold her interest in Activity D for a $10,000 gain. Activity D, which had been profitable until last year, had a current loss of $1,500. Answer the following questions to determine how the sale of Activity D affects Sarah's taxable income in the current year. a. The amount of suspended losses carried forward to the year of the sale is s -20,000 V. b. What amount of the suspended losses is allocated to Activity D? $ -2,000 C. How much, if any, of this net gain may be used to absorb passive activity losses from other activities? $ -18,000 x

Answer 1

Ръоblеm 11-AS: Answex of forward to a. The amount the year of suspended lossey carried sale is $-20,000. b. what amount of suspended losser is allocated to Activity D? $ - 2,000. C. How much, if any, of this net gain may be used to absorb passive activity losses from other activities? $6,500 Explanation: a) Activity a Income oy (Loss) in Dollars (6) $ 30,000 $ 130,000) $15.000) $ (5,000) $120,000) cua Net passive Loss

activities in the b) Net passive loss allocated to the ratio of 30.1515 ..30 Activity B = $(201000) x = $(12.000) 30+15+5 - $ (123000) Activity < = $(2010003 * 0 15:45 $16.00) Activity D = $120,000) * Dists = $62,000) Amount (6) Total Gain selling interest in Activity D $10.000 Less: 2055 shares in Activity D $ (2000) Lesso current loss :: $(1,500) Total Gain used to recover the boss $6,500 - The net gairi of $6,500. from the sale may be used to absorb passive losses from the other activities.

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