chapter 11 homework solutions

chapter 11 homework solutions - Individual Tax Accounting...

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Individual Tax Accounting and Planning – 2011 Edition Chapter 11 – homework solutions 34. Hoffman, Smith, and Willis, CPAs 5191 Natorp Boulevard Mason, OH 45040 February 5, 2010 Mr. Bill Parker 54 Oak Drive St. Paul, MN 55162 Dear Mr. Parker: This letter is in response to your inquiry regarding the tax treatment of losses that you could expect this year and next year from an investment in Best Choice Partnership. As I understand the facts, you would invest $60,000 in the partnership with the expectation that your share of the partnership losses in the current and succeeding years would be $40,000 and $25,000, respectively. Even though your investment would not be subject to the passive activity limitations, the amount of the deduction that you may claim in any one year is subject to the at-risk rules. Essentially, these rules provide that your deductions are limited to the amount that you have invested in the venture or the amount that you could lose if the investment were to be unsuccessful. Consequently, in your case, the initial amount that you would have at
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