In 2012 Tony invests $35,000 in an activity for which he is not a material participant. Tony has no other sources of income. Tony\'s losses from the activity are as follows:
Income/(Loss)
2012 ($25,000)
2013 ($15,000)
2014 $50,000
Calculate Tony’s deductible loss, basis, and any losses suspended under the at-risk and/or passive activity loss rules each year.
Solution
As Tonu is not a material participant, the basis will be
Year 1 35000
Year 2 10000(35000-25000)
Year 3 -5000(10000-15000)
The risk will be
2012 35000
2013 10000
2014 0
.
In 2012 Tony invests $35-000 in an activity for which he is not a mate.docx
1. In 2012 Tony invests $35,000 in an activity for which he is not a material participant. Tony has
no other sources of income. Tony's losses from the activity are as follows:
Income/(Loss)
2012 ($25,000)
2013 ($15,000)
2014 $50,000
Calculate Tony’s deductible loss, basis, and any losses suspended under the at-risk and/or
passive activity loss rules each year.
Solution
As Tonu is not a material participant, the basis will be
Year 1 35000
Year 2 10000(35000-25000)
Year 3 -5000(10000-15000)
The risk will be
2012 35000
2013 10000
2014 0
