54. Damarcus is a 50 percent owner of Hoop (a business entity). In the current year, Hoop reported a $100,000 business loss. Answer the following questions associated with each of the following alternative scenarios.

a. Hoop is organized as a C corporation and Damarcus works full-time as an employee for Hoop. Damarcus has a $20,000 basis in his Hoop stock. How much of Hoop’s loss is Damarcus allowed to deduct against his other income?

b. Hoop is organized as an LLC taxed as a partnership. Fifty percent of Hoop’s loss is allocated to Damarcus. Damarcus works fulltime for Hoop (he is not considered to be a passive investor in Hoop). Damarcus has a

$20,000 basis in his Hoop ownership interest and he also has a $20,000 at-risk amount in his investment in Hoop.

Damarcus does not report income or loss from any other business activity investments. How much of the $50,000 loss allocated to him by Hoop is Damarcus allowed to deduct this year?

c. Hoop is organized as an LLC taxed as a partnership. Fifty percent of Hoop’s loss is allocated to Damarcus. Damarcus does not work for Hoop at all (he is a passive investor in Hoop). Damarcus has a $20,000 basis in his Hoop ownership interest and he also has a $20,000 at-risk amount in his investment in Hoop. Damarcus does not report income or loss from any other business activity investments. How much of the $50,000 loss allocated to him by Hoop is Damarcus allowed to deduct this year?

d. Hoop is organized as an LLC taxed as a partnership. Fifty percent of Hoop’s loss is allocated to Damarcus. Damarcus works fulltime for Hoop (he is not considered to be a passive investor in Hoop). Damarcus has a $70,000 basis in his Hoop ownership interest and he also has a $70,000 at-risk amount in his investment in Hoop.
Damarcus does not report income or loss from any other business activity investments. How much of the $50,000 loss allocated to him by Hoop is Damarcus allowed to deduct this year?

e. Hoop is organized as an LLC taxed as a partnership. Fifty percent of Hoop’s loss is allocated to Damarcus. Damarcus does not work for Hoop at all (he is a passive investor in Hoop). Damarcus has a $20,000 basis in his Hoop ownership interest and he also has a $20,000 at-risk amount in his investment in Hoop. Damarcus reports $10,000 of income from a business activity in which he is a passive investor. How much of the $50,000 loss allocated to him by Hoop is Damarcus allowed to deduct this year?