Required information Suki and Steve own 50 percent capital and profits interests in Lorinda LLC. Lorinda operates the local minor league baseball team and owns the stadium where the team plays. Although the debt incurred to build the stadium was paid off several years ago, Lorinda owes its general creditors $300,000 (at the beginning of the year) that is not secured by firm property or guaranteed by any of the members. At the beginning of the current year, Suki and Steve had a tax basis of $170,000 in their LLC interests, including their share of debt owed to the general creditors. Shortly before the end of the year they each received a $10,000 cash distribution, even though Lorinda's ordinary business loss for the year was $400,000. Because of the time commitment to operate a baseball team, both Suki and Steve spent more than 1,500 hours during the year operating Lorinda. (Leave no answer blank. Enter zero if applicable.) a-1. Determine how much of the Lorinda loss Suki and Steve will each be able to deduct on their current tax returns. $ 40,000 Loss deductible by each a-2. List their losses suspended by the tax basis, at-risk, and passive activity loss limitations. Losses Suspended Tax basis limitation each At-risk basis limitation each Passive activity limitation Required information Suki and Steve own 50 percent capital and profits interests in Lorinda LLC. Lorinda operates the local minor league baseball team and owns the stadium where the team plays. Although the debt incurred to build the stadium was paid off several years ago, Lorinda owes its general creditors $300,000 (at the beginning of the year) that is not secured by firm property or guaranteed by any of the members. At the beginning of the current year, Suki and Steve had a tax basis of $170,000 in their LLC interests, including their share of debt owed to the general creditors. Shortly before the end of the year they each received a $10,000 cash distribution, even though Lorinda's ordinary business loss for the year was $400,000. Because of the time commitment to operate a baseball team, both Suki and Steve spent more than 1,500 hours during the year operating Lorinda. (Leave no answer blank. Enter zero if applicable.) Assume that some time before receiving the $10,000 cash distribution, Steve is advised by his tax adviser that his marginal tax rate will be abnormally high during the current year because of an unexpected windfall. To help Steve utilize more of the losses allocated from Lorinda in the current year, his adviser recommends refusing the cash distribution and personally guaranteeing $100,000 of Lorinda's debt, without the right to be reimbursed by Suki. Assuming Steve follows his adviser's recommendation: b-1. How much additional Lorinda loss can he deduct on his current tax return? Additional loss b-2. How much Lorinda loss can Suki deduct on her current tax return? Deductible loss Required information Suki and Steve own 50 percent capital and profits interests in Lorinda LLC. Lorinda operates the local minor league baseball team and owns the stadium where the team plays. Although the debt incurred to build the stadium was paid off several years ago, Lorinda owes its general creditors $300,000 (at the beginning of the year) that is not secured by firm property or guaranteed by any of the members. At the beginning of the current year, Suki and Steve had a tax basis of $170,000 in their LLC interests, including their share of debt owed to the general creditors. Shortly before the end of the year they each received a $10,000 cash distribution, even though Lorinda's ordinary business loss for the year was $400,000. Because of the time commitment to operate a baseball team, both Suki and Steve spent more than 1,500 hours during the year operating Lorinda. (Leave no answer blank. Enter zero if applicable.) a-1. Determine how much of the Lorinda loss Suki and Steve will each be able to deduct on their current tax returns. $ 40,000 Loss deductible by each a-2. List their losses suspended by the tax basis, at-risk, and passive activity loss limitations. Losses Suspended Tax basis limitation each At-risk basis limitation each Passive activity limitation Required information Suki and Steve own 50 percent capital and profits interests in Lorinda LLC. Lorinda operates the local minor league baseball team and owns the stadium where the team plays. Although the debt incurred to build the stadium was paid off several years ago, Lorinda owes its general creditors $300,000 (at the beginning of the year) that is not secured by firm property or guaranteed by any of the members. At the beginning of the current year, Suki and Steve had a tax basis of $170,000 in their LLC interests, including their share of debt owed to the general creditors. Shortly before the end of the year they each received a $10,000 cash distribution, even though Lorinda's ordinary business loss for the year was $400,000. Because of the time commitment to operate a baseball team, both Suki and Steve spent more than 1,500 hours during the year operating Lorinda. (Leave no answer blank. Enter zero if applicable.) Assume that some time before receiving the $10,000 cash distribution, Steve is advised by his tax adviser that his marginal tax rate will be abnormally high during the current year because of an unexpected windfall. To help Steve utilize more of the losses allocated from Lorinda in the current year, his adviser recommends refusing the cash distribution and personally guaranteeing $100,000 of Lorinda's debt, without the right to be reimbursed by Suki. Assuming Steve follows his adviser's recommendation: b-1. How much additional Lorinda loss can he deduct on his current tax return? Additional loss b-2. How much Lorinda loss can Suki deduct on her current tax return? Deductible loss
