Class 3b Ordinary Losses and At Risk

Class 3b Ordinary Losses and At Risk -...

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Taxation of the Business Entity Online Lecture Series Ordinary Income & Losses Presented by Akore Berliner, CPA
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ORDINARY INCOME AND LOSSES aka Business  Operating Income / Losses From Sale of Ordinary Assets (Inventory, Receivables) Where the taxpayer materially participates “Where the taxpayer works” Different from Passive Income
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ORDINARY INCOME TAX Income is  Taxed at  Ordinary  Rates See tax tables Losses  are  limited  to  Amounts At Risk May offset ordinary income or portfolio  income
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ORDINARY  LOSS  DEDUCTION Deductible Ordinary loss = Amount At Risk At Risk = The amount of a taxpayer’s economic investment   Economic Investment  =   Amount of  cash  contributed to the activity  Adjusted basis of  property  contributed to the activity  Amounts  borrowed  for which taxpayer is personally liable (recourse  debt) Taxpayers may not deduct a loss for which they are not “At Risk” Disallowed Loss is Carried forward for future use
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This note was uploaded on 08/11/2011 for the course ACCT 103 taught by Professor Huxhold during the Spring '11 term at San Diego.

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Class 3b Ordinary Losses and At Risk -...

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