1. Salvatore, an investor-broker, earns $195,000 from his practice in the current year. He receives $35,000 in dividends and interest during the year. In addition, he incurs a loss of $18,000 from an investment in a passive activity acquired three years ago. After considering the passive investment, Salvatore's net income for the current year is $
1. Salvatore, an investor-broker, earns $195,000 from his practice in the current year. He receives $35,000 in dividends and interest during the year. In addition, he incurs a loss of $18,000 from an investment in a passive activity acquired three years ago.
After considering the passive investment, Salvatore's net income for the current year is $
2. LeAnne, a physician, earns $315,000 from her medical practice in the current year. She receives $40,000 in dividends and interest during the year. In addition, she incurs a loss of $42,000 from an investment in a passive activity acquired three years ago and has income of $9,000 from an investment in a passive activity acquired one year ago.
After considering the passive investments, LeAnne's net income for the current year is $
3. Gabriel, an accountant, earns $360,000 from his practice. He also receives $9,100 in dividends and interest from various portfolio investments. During the year, he pays $85,000 to acquire a 15% interest in a partnership that produces a $120,000 loss. In addition, he has a $12,000 passive income from other sources. Compute Gabriel's AGI assuming that:
a. He does not participate in the operations of the partnership.
In this case, Gabriel's AGI is $.
b. He is a material participant in the operations of the partnership.
In this case, Gabriel's AGI is $.
4. Several years ago Otto acquired an apartment building that currently generates a loss of $49,000. He has AGI of $155,000 before considering the loss. Otto is not an active participant in the activity.
Complete the paragraph below explaining what effect the loss will have on his AGI.
The activity is activity, and Otto is not an active participant. Therefore, deduction is allowed under the real estate rental exception. The $49,000 loss is under the rules, and Otto's AGI is $.
5. Several years ago, Sabrina acquired an apartment building that currently generates a loss of $87,000. She has AGI of $340,000 before considering the loss. Sabrina is not an active participant in the activity.
Complete the paragraph below explaining what effect the loss will have on her AGI.
The activity is activity, and Sabrina is not an active participant. Therefore, deduction is allowed under the real estate rental exception. The $87,000 loss is under the rules, and Sabrina's AGI is $.
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