Farell is a member of Sierra Vista LLC Although Sierra Vista is involved in a number of different business ventures, it is not currently involved in real estate either as an investor or as a developer On January 1, year 1, Farell has a $106,000 tax basis in his LLC interest that includes his $90,000 share of Sierra Vistas general liabilities By the end of the year, Farells share of Sierra Vistas general liabilities have increased to $106,000 Because of the time he spends in other endeavors, Farell does not materially participate in Sierra Vista His share of the Sierra Vista losses for year 1 is $141,000 As a partner in the Riverwoods Partnership, he also has year 1, Schedule K 1 passive income of $14,000 Farell is single and has no other sources of business income or loss (Leave no answer blank Enter zero if applicable ) Problem 20 76 Part a (Algo) a 1 Determine how much of the Sierra Vista loss Farell will currently be able to deduct on his tax return for year 1 a 2 List the losses suspended due to tax basis, at risk, and passive activity loss limitations a 1 Deductible loss a 2 Losses suspended by tax basis limitation a 2 Losses suspended by at risk limitation a 2 Losses suspended by passive activity loss limitation Assume Farells Riverwoods K 1 indicates passive income of $28,000 b 1 Determine how much of the Sierra Vista loss he will ultimately be able to deduct on his tax return for year 1 b 2 List the losses suspended due to tax basis, at risk, and passive activity loss limitation b 1 Deductible loss b 2 Losses suspended by tax basis limitation b 2 Losses suspended by at risk limitation b 2 Losses suspended by passive activity loss limitation Assume Farell is deemed to be an active participant in Sierra Vista c 1 Determine how much of the Sierra Vista loss he will ultimately be able to deduct on his tax return for year 1 c 2 List the losses suspended due to tax basis, at risk, and passive activity loss limitations d Assuming Farell is deemed to be an active participant in Sierra Vista and he has a $262,000 loss from a sole proprietorship, determine how much total trade or business loss Farell will deduct on his return if year 1 is 2020

The Answer is in the image, click to view ...

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Sep 14, 2024

Farell is a member of Sierra Vista LLC. Although Sierra Vista is involved in a number of different business ventures, it is not currently involved

Farell is a member of Sierra Vista LLC. Although Sierra Vista is involved in a number of different business ventures, it is not currently involved in real estate either as an investor or as a developer. On January 1, year 1, Farell has a $106,000 tax basis in his LLC interest that includes his $90,000 share of Sierra Vistas general liabilities. By the end of the year, Farells share of Sierra Vistas general liabilities have increased to $106,000. Because of the time he spends in other endeavors, Farell does not materially participate in Sierra Vista. His share of the Sierra Vista losses for year 1 is $141,000. As a partner in the Riverwoods Partnership, he also has year 1, Schedule K-1 passive income of $14,000. Farell is single and has no other sources of business income or loss. (Leave no answer blank. Enter zero if applicable.)

Problem 20-76 Part a (Algo)

a-1. Determine how much of the Sierra Vista loss Farell will currently be able to deduct on his tax return for year 1.
a-2. List the losses suspended due to tax-basis, at-risk, and passive activity loss limitations.

a-1. Deductible loss
a-2. Losses suspended by tax basis limitation
a-2. Losses suspended by at-risk limitation
a-2. Losses suspended by passive activity loss limitation

Assume Farells Riverwoods K-1 indicates passive income of $28,000.

b-1. Determine how much of the Sierra Vista loss he will ultimately be able to deduct on his tax return for year 1.
b-2. List the losses suspended due to tax-basis, at-risk, and passive activity loss limitation

b-1. Deductible loss
b-2. Losses suspended by tax basis limitation
b-2.Losses suspended by at-risk limitation
b-2.Losses suspended by passive activity loss limitation

Assume Farell is deemed to be an active participant in Sierra Vista.

c-1. Determine how much of the Sierra Vista loss he will ultimately be able to deduct on his tax return for year 1.
c-2. List the losses suspended due to tax-basis, at-risk, and passive activity loss limitations.

d. Assuming Farell is deemed to be an active participant in Sierra Vista and he has a $262,000 loss from a sole proprietorship, determine how much total trade or business loss Farell will deduct on his return if year 1 is 2020.