Question

vestor. How much of the $50,000 loss allocated to him by Hoop is Damarcus allowed to deduct this year? 55 Danni is a single 30 percent owner of Kolt (a business entity). In the current year, Kolt reported a $1,000,000 business loss. Answer the following questions associ- ated with each of the following alternative scenarios: a) Kolt is organized as a C corporation and Danni works 20 hours a week as an employee for Kolt. Danni has a $200,000 basis in her Kolt stock. How much of Kolt's loss is Danni allowed to deduct this year against her other income? b) Kolt is organized is allocated to Danni. Danni works 20 hours a week on Kolt business activities (she is not considered to be a passive investor in Kolt). Danni has a $400,000 basis in her Kolt ownership interest and she also has a $400,000 at-risk amount in her investment in Kolt. Danni does not report income or loss from any other business activity investments. How much of the $300,000 loss allocated to her from Kolt is Danni allowed to deduct this year? as an LLC taxed as a partnership. Thirty percent of Kolt's loss c) Kolt is organized as an LLC taxed as a partnership. Thirty percent of Kolt's loss is allocated to Danni. Danni is not involved in Kolt business activities. Conse- quently, she is considered to be a passive investor in Kolt. Danni has a $400,000 basis in her Kolt ownership interest and she also has a $400,000 at-risk amount in her investment in Kolt. Danni does not report income or loss from any other ies Overview business activity investments. How much of the $300,000 loss allocated to her from Kolt is Danni allowed to deduct this year?

Answer 1

Katt is anised as aC Carparatien and Danni warks 2o hours emplayee far kalt. week aus an lass of the Neither inleme nar Car faration tasses thraugh couperation to it sharehaldns C Casparatien Can net afasiating loy ytaasct aganised ohen a Carfasation ben efit business asc LA ufferes prouides Ahatehalders any lass it to As such Danni is nat allawed to deduct any amount of kalt thi year againat las othen her Se sharte co loss allosd to be deducted kalt is organised fasut nenship LLC taxed as am a as single 300lo allacated Danni as loss a COwne Ond 300,0c0

The daductibility ter allocated as has shaste limited Hen adiusted basi in hisha tnderest in the ntty Hen amaunt" at gis th the end of $400.000 geapect to the eatit the yeas Dana hds a basis nher kalt conekship interist and at Suisk she alsahas a 400000 kalt investment in her Qmeurt Maneaver par Tax its and Jab Act, fassiue as taxpayeh lestm trade nen- Cimited ar business is nou MEJ to $500,000 an far beginning ater Decembax 31,20/n befare Tanuarg 1 ,2026 250.000 and taxfayess fe other gars and Fax As such lss ill be a0lauead She is limited ta 25o, ooo this deduet year Any eated business lass is part the tax paycs aperating loss lary toruard ling yeats excess net as to bo in next used $250, So, Sharu of es allaued to deduct

Page No. Damni i at invalved n kalt business aetiuities Censeguntyphe is Censidaredd to Kalt be passine investar in Pabsiue aetiwty los for 1 0 When the entity is ar the Coner able to ny yeag to the extend e los Gce ds her inceme tem sthe fassiue actiuites 11 Ahe may natbe r shase Lise Sine Danni dLass nat afort mLeme a busine s Loss brem any ather atiuidy investments, she s nat allauad amount of duct ocated to to har 300,000 los fom kalt So, share a loss allaused to be daducted