income tax concept unit 9

Using your text, complete the following. In these problems, apply your knowledge of the rules and laws associated with at-risk or passive activity losses, as well as the individual AMT.

· Problem 37, on page 13-41.

· Problem 40, on page 13-41.

· Problem 44, on page 13-42.

· Problem 47, on page 13-43.

· Problem 48, on page 13-43.

· Problem 51, on page 13-44.

· Problem 54, on page 13-45.

· Problem 57, on page 13-46.

37. Cindy, Casey, and Kara each invested $30,000 in a real estate venture. The partnership borrowed $200,000 and purchased a warehouse for $290,000. The note was secured by the building; there was no personal recourse against the partners. What is each partner’s beginning at-risk amount in the venture?

40. Darrell acquired an activity eight years ago. The loss from it in the current year was $65,000. The activity involves residential rental real estate in which he is an active participant. Calculate Darrell’s AGI after considering that Darrell’s AGI was $100,000 before including any potential loss.

44. This year Robert had the following income and losses from four passive activities:

Activity 1	$(20,000)
Activity 2	(10,000)
Activity 3	(5,000)
Activity 4	33,000

Activity 4 had $10,000 of passive losses that are carried over from a prior year. Robert also had wages of $110,000.

a. How much income or loss does Robert have from the four activities?

b. How are the suspended PALs allocated?

c. If Activity 1 were sold at an $18,000 gain, what would be the total income or loss from the four activities?

47. Jackson invested $190,000 in a passive activity five years ago. On January 1, 2017, his at-risk amount in the activity was $45,000. His share of the income and losses in the activity were $52,000 loss in 2017, $20,000 loss in 2018, and $80,000 gain in 2019. How much can Jackson deduct in 2017 and 2018? What is his taxable income from the activity in 2019? Keep in mind the at-risk rules as well as the passive loss rules.

48. Hunter has a $38,000 loss from an investment in a partnership in which he does not participate. His basis in the interest is $35,000.

a.How much of the loss is disallowed by the at-risk rules?

b.How much of the loss is disallowed by the passive loss rules?

51. Benny sells an apartment building. His adjusted basis for regular income tax purposes is $450,000, and it is $475,000 for AMT purposes. He receives $700,000 from the sale.

Calculate Benny’s gain for regular income tax purposes.

Calculate Benny’s gain for AMT purposes.

Calculate any applicable AMT adjustment.

54. Herbie is the owner of two apartment buildings. Following is information related to the two buildings:

Herbie elected the maximum depreciation available for each asset. What is the effect of depreciation on AMTI for 2019?

57. Barbara is single and owns a home in the city, which is her primary residence. She also owns a cottage at the beach, which she treats as a vacation home. In April 2019, she borrowed $50,000 on a home equity loan and used the proceeds to pay off credit card obligations and other debt. She paid the following in 2019:

Mortgage interest (personal residence)	$15,000
Mortgage interest (cottage)	8,000
Interest on the home equity loan	5,000
Interest on credit card	2,500

Calculate any AMT adjustment concerning interest in 2019.