Question

choose the answer and show your work

__32. In 2012 Jim invested $50,000 in a Texas cattle ranch. He has visited the ranch each year for a week of tennis and vacationing. His share of the profit in 2012 was $25,000, in 2013 it broke even and in 2014 his share was $10,000 loss. Jim has not received any financial distribution since his original investment. What is his at risk amount at the end of 2014?

            a. $50,000

            b. $65,000

            c. $75,000

            d. cannot be determined form given facts

____33. In 2014 Kara sold a passive asset A with suspended losses of $75,000. Her basis was

-0-, she personally guaranteed notes from the company. Proceeds were $150,000. She had passive losses on asset B of $50,000 when her at-risk amount was reduced to -0-. What is her gain for 2014 on passive activity?

            a. $25,000 gain

            b. $50,000 gain

            c. $75,000 gain

            d. $150,000 gain

____34. In 2013 Louis invested $75,000 for a 50% interest in a partnership in which he spent 15-20 hours every week. In 2013 the partnership did nothing, in 2014 it lost 130,000 and in 2015 it lost 80,000. (His share was (65,000) in 2013 and (40,000) in 2014). How much can Henry deduct on his tax return

            a. 0

            b. 65,000 in 2014, 10,000 in 2015

            c. 65,000 in 2014, 40,000 in 2015

            d. 75,000 in2014, 0 in 2015

____35. After doing all computation for 2015, you conclude that your regular tax is 26,000 and your AMT tax is 28,500. You will pay the IRS on April 18, 2016

            a. 26,000

            b. 28,500

            c. 54,500

Answer 1

32. At - Risk amount would be $ 50,000 + $ 25,000 (profit of 2012) - $ 10,000 (loss) = $ 65000

34. Louis can deduct qhole of $ 65000 in 2014 however in 2015 the loss shall be restricted to $ 75000 and thus remaining $ 10000

35.AMT is alternate min. tax which needs to be paid if normal income tax is below it, thus IRS shall be paid 28500

Please note that only one question per post or one question with max 4 sub parts is allowed to be solved. Though I solve 3. I was not confident of 33 so did not attempt, hope this helps.