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In 2018, Devin invested $200,000 as a limited partner in a XYZ Limited Partnership.Devin’s share of...

In 2018, Devin invested $200,000 as a limited partner in a XYZ Limited Partnership.Devin’s share of XYZ LP’s deductible loss for 2018 was $20,000.In 2018, Devin also had $100,000 in salary income, $7,000 in portfolio income, and$11,000 in passive income (from another passive activity - ABC LP). What amount of the$20,000 loss from XYZ LP can Devin deduct in 2018? Enter as a positive number.

Same facts as previous question.

In 2019, Devin's share of income from XYZ LP was $5,000. Devin also had salary income

of $50,000 and portfolio income of $1,000. ABC LP (Devin's other passive activity) did not

generate a gain or loss in 2019.

What amount of passive activity losses can Devin deduct in 2019? Enter as a positive

number.

Same facts as previous question.

On January 1, 2020, Devin sold his interest in XYZ LP.

In 2020, Devin had salary income of $50,000 and portfolio income of $1,000. ABC LP did

not generate a gain or loss in 2020.

What amount of passive activity losses can Devin deduct in 2020? Enter as a positive

number.

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Homework Answers

Answer #1

Given that:

2018:

Devin invested $2,00,000 in XYZ

loss = 20,000

Salary Income : $1,00,000

Portfolio Income : $7,000

Passive Income : $11,000

2019

Salary Income : $55,000

Portfolio Income : $1,000

Passive Income : NIL

Income : $5,000

2020

Sold his share to XYZ

Salary Income : $50,000

Portfolio Income : $1,000

Passive Income : NIL

Calculation:

In 2018, Devin had a loss of $20,000, which will be set off from Passive income of $11,000. Passive income includes regular earnings from a source other than an employer or contractor. Generally passive income can come from two sources: rental property or a business in which one does not actively participate, such as being paid book royalties or stock dividend.

Devin will be still left with $20,000- $11,000= $9,000 loss.

In 2019, Devin had a income of $5,000 which will be used to set off the remaining amount of loss, ie, $11,000. After setting off the loss, Devin will still have a loss of $11,000- $5,000= $6,000. which will be carry forward for the next year.

In 2020, Devin sold his interest in XYZ LP. The income obtained from the sales will be used for setting off the remaining loss of $6,000.

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