In 2012 Annie invests $55,000 in an activity for which she is not a material participant. Annie has no other sources of income. Annie\'s losses from the activity are as follows: Income/(Loss) 2012 ($45,000) 2013 ($20,000) 2014 $30,000 Calculate Annie’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 55000 Year 2 10000(55000-45000) Year 3 -10000(10000-20000) The risk will be 2012 55000 2013 10000 2014 (10000).