What is the correct order in which the limitations on potential losses must be applied for 2022? First, basis; second, at - risk; third, passive activity; fourth, excess business loss. First, at-risk; second, basis; third, excess business loss; fourth, passive activity. First, passive activity; second, excess business loss; third, basis; fourth, at-risk. First, basis; second, passive activity; third, excess business loss; fourth, at - risk. Mark for follow up Question 12 of 30. Which item on a Schedule K -1 (Form 1065) would subject the partner to self-employment tax? Interest. Royalties not derived in the ordinary course of a trade or business. Ordinary income, but only if the partner was a limited partner. Guaranteed payments for services rendered by a partner to a partnership. Mark for follow up Question 13 of 30. Hale receives a Schedule K-1 from a family business that he does not actively participate in. On it, he shows interest income of $245 and dividends of $681. The Schedule K-1 also includes $275 in annuities. Hale also has a passive loss of $1,721 from another business. Can he offset the loss with the Schedule K-1 income? Yes, he can offset $926 (the interest and dividends) of the loss using the interest and dividends, but not the $275 (annuities). No, he cannot offset passive losses with portfolio income. Yes, he can offset $1,201 of the loss using the investment income. No, he can only use investment income against passive losses when the income is greater than the loss.
What is the correct order in which the limitations on potential losses must be applied for 2022? First, basis; second, at - risk; third, passive activity; fourth, excess business loss. First, at-risk; second, basis; third, excess business loss; fourth, passive activity. First, passive activity; second, excess business loss; third, basis; fourth, at-risk. First, basis; second, passive activity; third, excess business loss; fourth, at - risk. Mark for follow up Question 12 of 30. Which item on a Schedule K -1 (Form 1065) would subject the partner to self-employment tax? Interest. Royalties not derived in the ordinary course of a trade or business. Ordinary income, but only if the partner was a limited partner. Guaranteed payments for services rendered by a partner to a partnership. Mark for follow up Question 13 of 30. Hale receives a Schedule K-1 from a family business that he does not actively participate in. On it, he shows interest income of $245 and dividends of $681. The Schedule K-1 also includes $275 in annuities. Hale also has a passive loss of $1,721 from another business. Can he offset the loss with the Schedule K-1 income? Yes, he can offset $926 (the interest and dividends) of the loss using the interest and dividends, but not the $275 (annuities). No, he cannot offset passive losses with portfolio income. Yes, he can offset $1,201 of the loss using the investment income. No, he can only use investment income against passive losses when the income is greater than the loss.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:What is the correct order in which the limitations on potential losses must be applied for 2022? First, basis; second, at - risk; third, passive activity; fourth, excess
business loss. First, at - risk; second, basis; third, excess business loss; fourth, passive activity. First, passive activity; second, excess business loss; third, basis;
fourth, at-risk. First, basis; second, passive activity; third, excess business loss; fourth, at - risk. Mark for follow up Question 12 of 30. Which item on a Schedule K
-1 (Form 1065) would subject the partner to self-employment tax? Interest. Royalties not derived in the ordinary course of a trade or business. Ordinary income,
but only if the partner was a limited partner. Guaranteed payments for services rendered by a partner to a partnership. Mark for follow up Question 13 of 30.
Hale receives a Schedule K-1 from a family business that he does not actively participate in. On it, he shows interest income of $245 and dividends of $681. The
Schedule K-1 also includes $275 in annuities. Hale also has a passive loss of $1,721 from another business. Can he offset the loss with the Schedule K-1 income?
Yes, he can offset $926 (the interest and dividends) of the loss using the interest and dividends, but not the $275 (annuities). No, he cannot offset passive
losses with portfolio income. Yes, he can offset $1,201 of the loss using the investment income. No, he can only use investment income against passive losses
when the income is greater than the loss.
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