Accounting/Tax Questions
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A.) Dorothy acquired passive Activity A in January 2001 and Activity B in September 2002. Through 2004, Activity A was profitable, but it produced losses of $200,000 in 2005 and $100,000 in 2006. Dorothy has passive income from Activity B of $20,000 in 2005 and $40,000 in 2006. After offsetting passive income, how much of the net losses may she deduct?
B). Hazel has investments in two nonrental passive activities: Activity A, acquired seven years ago and profitable until the current year, and Activity B, acquired this year. Currently, Hazel's shares of the activities' losses are $10,000 from Activity A and $6,000 from Activity B. What is the total of Hazel's suspended losses from these activities?
C). Bob, an attorney, earns $200,000 from his law practice in the current year. He receives $45,000 in dividends and interest during the year. In addition, he incurs a loss of $50,000 from an investment in a passive activity acquired three years ago. What is Bob's net income for the current year after considering the passive investment?
D). Ray acquired an activity several years ago, and in the current year, it generated a loss of $50,000. Ray has AGI of $140,000 before considering the loss from the activity. If the activity is a bakery and Ray is not a material participant, what is his AGI?
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A.) Dorothy acquired passive Activity A in January 2001 and Activity B in September 2002. Through 2004, Activity A was profitable, but it produced losses of $200,000 in 2005 and $100,000 in 2006. Dorothy has passive income from Activity B of $20,000 in 2005 and $40,000 in 2006. After offsetting passive income, how much of the net losses may she deduct?
The net loss from passive activity in 2005 is $200,000 less passive income from Activity B of $20,000 that is $180,000. However, unless Dorothy has other passive income or qualifies as a real estate professional, she or her spouse unless each file their incomes separately can offset a maximum of $25,000 against her active income (Special Allowance) from their income unless their total incomes are greater than $100,000 a year.
B). Hazel has ...
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