Five years ago, Gerald invested $122,000 in a passive activity, his sole investment venture. On January 1, 2018, his amount at risk in the activity was $24,400. His shares of the income and losses were as follows: Year Income (Loss) 2018 ($36,600) 2019 (24,400) 2020 44,400 Gerald holds no suspended at-risk or passive activity losses at the beginning of 2018. If an answer is zero, enter "0". a. If losses were limited only by the at-risk rules, how much can Gerald deduct in 2018 and 2019? Year Loss Allowed Suspended 2018 ($36,600) 2019 ($24,400) Total

FINANCIAL ACCOUNTING
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Author:Libby
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Chapter1: Financial Statements And Business Decisions
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b. Refer to the information in part (a) above. If losses were limited by the at-risk and the passive activity loss rules, how much would
Gerald be able to deduct in 2018 and 2019?
Of the allowable at-risk loss for 2018, Gerald may deduct :
in 2018 due to the passive loss rules and of the allowable at-
risk loss from 2019, Gerald may deduct $
in 2019 due to the passive loss rules.
c. Assuming Gerald has $50,000 income in 2020, (and considering both at-risk and passive activity loss rules), what is the amount of
Gerald's suspended losses at the end of 2020?
Suspended under the at-risk rules:
• Suspended under the passive activity loss rules: $
What is his taxable income for 2020?
At the end of 2020, what is the amount of Gerald's adjusted basis in the activity? $
Transcribed Image Text:b. Refer to the information in part (a) above. If losses were limited by the at-risk and the passive activity loss rules, how much would Gerald be able to deduct in 2018 and 2019? Of the allowable at-risk loss for 2018, Gerald may deduct : in 2018 due to the passive loss rules and of the allowable at- risk loss from 2019, Gerald may deduct $ in 2019 due to the passive loss rules. c. Assuming Gerald has $50,000 income in 2020, (and considering both at-risk and passive activity loss rules), what is the amount of Gerald's suspended losses at the end of 2020? Suspended under the at-risk rules: • Suspended under the passive activity loss rules: $ What is his taxable income for 2020? At the end of 2020, what is the amount of Gerald's adjusted basis in the activity? $
Five years ago, Gerald invested $122,000 in a passive activity, his sole investment venture. On January 1, 2018, his amount at risk in the
activity was $24,400. His shares of the income and losses were as follows:
Year
Income (Loss)
2018
($36,600)
2019
(24,400)
2020
44,400
Gerald holds no suspended at-risk or passive activity losses at the beginning of 2018.
If an answer is zero, enter "0".
a. If losses were limited only by the at-risk rules, how much can Gerald deduct in 2018 and 2019?
Year
Loss
Allowed
Suspended
2018
($36,600)
2019
($24,400)
Total
Transcribed Image Text:Five years ago, Gerald invested $122,000 in a passive activity, his sole investment venture. On January 1, 2018, his amount at risk in the activity was $24,400. His shares of the income and losses were as follows: Year Income (Loss) 2018 ($36,600) 2019 (24,400) 2020 44,400 Gerald holds no suspended at-risk or passive activity losses at the beginning of 2018. If an answer is zero, enter "0". a. If losses were limited only by the at-risk rules, how much can Gerald deduct in 2018 and 2019? Year Loss Allowed Suspended 2018 ($36,600) 2019 ($24,400) Total
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