Exam 13: At-Riskpassive Activity Loss Rules and the Individual Alternative Minimum Tax

Catherine purchased furniture and fixtures (7-year property)for her shop for $80,000 in May 2014.What AMT depreciation adjustment is required in 2014?

When determining whether a limited partnership loss is deductible,a taxpayer must first:

The at-risk amount is increased each tax year by:

Baird has four passive activities.The following income and losses are generated in the current year. How much of the $60,000 net passive loss can Baird deduct this year? Calculate the suspended losses (by activity).

Stuart owns a 20% interest in a partnership (not involved in real estate)in which his at-risk amount was $18,000 at the beginning of the year.The partnership produces a $50,000 loss for the year.What is Stuart's at-risk amount at the end of the year?

Which of the following itemized deductions is not allowed for AMT?

If a taxpayer disposes of a passive activity in a taxable transaction,suspended passive losses from past years can be used to offset salary and portfolio income.

There is no difference between regular tax depreciation and AMT depreciation on real property placed in service after 1998.

Spencer has an ownership interest in three passive activities.In the current tax year,the activities had the following income and losses: How much in passive losses can Spencer deduct?

The initial amount considered at-risk is the cash plus the adjusted basis of property contributed to the activity plus certain borrowed amounts.

"Active participation" is a much more difficult standard to meet than "material participation."

Baxter invested $50,000 in an activity in 2010.At the beginning of 2012,Baxter's at-risk amount was $10,000.Baxter's share of losses from the activity were as follows: If you ignore the passive loss rules,how much income/loss will Baxter have from the activity in 2014?

An equipment leasing activity is not subject to the at-risk rules.

Rene owns four small businesses.Rene spends the following number of hours this year working in those businesses: Business A,105 hours; Business B,130 hours; Business C,120 hours; Business D,99 hours.Which of the following statements is correct?

Elijah owns an apartment complex that he actively manages.Elijah paid $300,000 cash for the apartment complex three years ago.During 2014,the rental activity generated a loss of $30,000.How much of the loss can Elijah deduct in 2014 in both of the following independent cases? a.Elijah has $80,000 of AGI (salary)before considering the loss generated by the apartment building. b.Elijah has $120,000 of AGI (salary)before considering the loss generated by the apartment building.

Ferris owns an interest in,but does not materially participate in,an activity.He has $30,000 at-risk.The business produced a loss in the current year and Ferris's share of the loss is $45,000.Assuming Ferris has no passive income,how much of the $45,000 loss will be deductible by Ferris?

Oliver has an $80,000 loss from an investment in a partnership in which he does not materially participate.He paid $60,000 for his interest.Oliver also has $10,000 of passive income from another limited partnership.How much of the loss,if any,is disallowed by the at-risk rules? How much is disallowed by the passive loss rules?

Libby owns and operates Mountain View Inn,a bed and breakfast.Libby's inn is not considered a passive activity.

For AMT purposes,a taxpayer must use which method to report proceeds from long-term contracts?

Itemized deductions are allowed in their entirety for AMT purposes.