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 $84,000 tax basis in his LLC interest that includes his $72,000 share of Sierra Vista's general liabilities. By the end of the year, Farell's share of Sierra Vista's general liabilities have increased to $84,000. 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 $115,000. As a partner in the Riverwoods Partnership, he also has year 1, Schedule K-1 passive income of $9,000. Farell is single and has no other sources of business income or loss. Note: Leave no answer blank. Enter zero if applicable.
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 $84,000 tax basis in his LLC interest that includes his $72,000 share of Sierra Vista's general liabilities. By the end of the year, Farell's share of Sierra Vista's general liabilities have increased to $84,000. 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 $115,000. As a partner in the Riverwoods Partnership, he also has year 1, Schedule K-1 passive income of $9,000. Farell is single and has no other sources of business income or loss. Note: Leave no answer blank. Enter zero if applicable.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![Required information
[The following information applies to the questions displayed below.]
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 $84,000 tax basis in his LLC interest that includes his $72,000 share of Sierra Vista's general
liabilities. By the end of the year, Farell's share of Sierra Vista's general liabilities have increased to
$84,000. 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 $115,000. As a partner in the Riverwoods Partnership,
he also has year 1, Schedule K-1 passive income of $9,000. Farell is single and has no other sources of
business income or loss.
Note: Leave no answer blank. Enter zero if applicable.
d. Assuming the original facts and that Farell is deemed to be an active participant in Sierra Vista, and he also has a $276,000
loss from a sole proprietorship, determine how much total trade or business loss Farell will deduct on his return in year 1.
Loss deductible](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F6e415e89-b15c-4691-b794-c1f1bc8f0e90%2F5e060c7c-cdc0-40b5-8513-99b381f9d383%2Fdbdjbia_processed.png&w=3840&q=75)
Transcribed Image Text:Required information
[The following information applies to the questions displayed below.]
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 $84,000 tax basis in his LLC interest that includes his $72,000 share of Sierra Vista's general
liabilities. By the end of the year, Farell's share of Sierra Vista's general liabilities have increased to
$84,000. 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 $115,000. As a partner in the Riverwoods Partnership,
he also has year 1, Schedule K-1 passive income of $9,000. Farell is single and has no other sources of
business income or loss.
Note: Leave no answer blank. Enter zero if applicable.
d. Assuming the original facts and that Farell is deemed to be an active participant in Sierra Vista, and he also has a $276,000
loss from a sole proprietorship, determine how much total trade or business loss Farell will deduct on his return in year 1.
Loss deductible
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