In_Class_Assignment_1_Reality_Check_Solution

# In_Class_Assignment_1_Reality_Check_Solution - Name _ Tax...

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Name _________________________________ Tax Research Spring 2010 In-Class Exercise #1 (5 points) “Reality Check” Solution Please respond to the following questions to the best of your ability. 1. Sarah (not in the loan business) loaned William \$10,000 two years ago. During the current year, William declared bankruptcy. For the current year, Sarah also received \$50,000 in wages and recognized a \$6,000 STCG. What is Sarah’s AGI for the year? \$10,000 is a non-business bad debt = STCL. She can deduct \$6,000 against her STCG and another \$3,000 against her wages. AGI = 50,000 + 6,000 – 9,000 = \$47,000. She has a \$1,000 STCL carryforward 2. Robert’s at-risk basis in Activity A at the beginning of 2008 is \$30,000. During 2009 he has a passive loss from Activity A of \$35,000, and passive income from Activity B of \$20,000. How much of Activity A’s loss can Robert deduct in 2009? \$20,000. 3. Complete the following Table: Questions General Partnership S Corporation C Corporation Who Pays tax on the entity’s income? Partners or the Partnership Shareholders or the Corporation Shareholders or the Corporation Are operating losses passed through to owners? YES

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## This note was uploaded on 08/25/2010 for the course TAX 6845 taught by Professor Kelliher,c during the Spring '08 term at University of Central Florida.

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In_Class_Assignment_1_Reality_Check_Solution - Name _ Tax...

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