Ch_7_Questions - Income Tax I Name _Christian Yimgnia_...

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Income Tax I Name __Christian Yimgnia__________ Chapter 7 Questions Explain and/or discuss the following based on reading the chapter and viewing the power points. Be thorough with your answers. You may take all the space you need. 1. Describe the at risk rules. The at risk rules do not allow losses that are in excess of an investor’s amount at risk. At risk is usually the amount of investment that an investor could possibly lose. So once the amount at risk is recorded, it can be used to offset income from other passive activities during the year. 2. What is a suspended loss? Can a suspended loss ever be deducted? Suspended losses are generally those from a passive activity which are disallowed by the passive loss rules. They can become deductible against future income from passive activities or again against non passive income upon the fully taxable disposition of an entire interest. Suspended loss can be used to offset passive income in the future tax years. 3.
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Ch_7_Questions - Income Tax I Name _Christian Yimgnia_...

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