AC553_W3_Solution7_45 - 0 $0 $21,000 2008 6,000 0 0 6,000...

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1 Problem 7-45 Solution Passive Losses: Material Participation—Suspended Losses Ms. Parker did not materially participate in the movie theater for 2007, 2008, 2009, and 2010, but she did materially participate in 2011. During these four years of operations, the activity experienced a $58,000 loss, which was entirely suspended: Year Loss Phaseout % Deduction Loss Suspended 2007 $21,000
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Unformatted text preview: 0 $0 $21,000 2008 6,000 0 0 6,000 2009 19,000 0 0 19,000 2010 12,000 0 0 12,000 Total Losses Suspended $58,000 Therefore, $24,000 of suspended losses will offset the $24,000 net income from the theater, and the balance ($34,000) will be available to offset future net income from the theater and from other activities that are passive. Portfolio income cannot be offset by the suspended loss....
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