testt - 51. a. If Jonathan is not a material participant,...

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51. a. If Jonathan is not a material participant, $45,000 of his $60,000 loss ($300,000 loss × 20% interest) is reclassified as a passive loss and disallowed under the passive loss limits. The remaining $15,000 is disallowed by the at-risk limits. Therefore, Jonathan’s AGI is $218,000 ($200,000 salary + 18,000 portfolio income). b. If Jonathan is a material participant, $45,000 of his $60,000 loss is deductible as an active loss. The remaining $15,000 is disallowed by the at-risk limits. Therefore, Jonathan’s AGI is $173,000 ($200,000 salary + $18,000 portfolio income – $45,000 active loss). Examples 37 to 39 52. If losses were limited only by the at-risk rules, Gerald would be able to deduct the following amounts in 2009 and 2010. Year Loss Allowed* Disallowed 2009 $40,000 $30,000 $10,000 2010 30,000 –0– 30,000 * Allowed under the at-risk rules, reclassified as a passive loss subject to the passive loss limitations. However, the losses also are limited by the passive loss rules as follows: Year Passive Deductible Suspended 2009 $30,000 $–0– $30,000 2010 –0– –0– –0– 36. a. Travel days count as business days and weekends also count as business days when preceded (i.e., Friday) and followed (i.e., Monday) by business days. For Brittany, Thursday is a personal day. Brittany’s deductible expenses are determined below: Airfare $2,600 Lodging (6 nights × $140) 840 Meals (5 days × $130) × 50% (cutback adjustment) 325 Total $3,765 Example 20 b. As Brittany was away from home for seven days, all of the airfare is deductible and no apportionment is required. [Note: Brittany also passes the less than 25% for personal purposes test (i.e., one day out of eight is less than 25%)]. Consequently, Brittany’s deductible expenses are $3,765—as determined in part a. of this problem. Examples 22, 23, and Footnote 18 c. Because Brittany is self-employed, a deduction for AGI results. p. 9-3 38. Although they may be very useful to their family, Mrs. Lord’s activities do not constitute a trade or business. Consequently, her expenses at the conference are not deductible. Alvin’s deductible expenses are as follows: Airfare (one ticket) $ 520 Lodging 660 Meals ($100 ×3 days) $300 Less: Cutback adjustment (150) 150 Registration fee ($520 – $120) 400 Car rental 240 Total $1,970 Examples 14, 15, and 17 39. a. Justin’s trip is treated as being 100% for business. Weekends and holidays are business days when preceded and followed by business days. Travel days are business days and (though not mentioned in the text) this should include days when travel is not possible (e.g., equipment failure, weather delays). b. Yes, as this causes Saturday, Sunday, and Monday to be nonbusiness days. c.
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testt - 51. a. If Jonathan is not a material participant,...

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