Exercise 21-22 (Algorithmic) (LO. 12) Tobias is a 50% partner in Solomon LLC, wh

Question

Exercise 21-22 (Algorithmic) (LO. 12)

Tobias is a 50% partner in Solomon LLC, which does not invest in real estate. On January 1, 2015, Tobias’s adjusted basis for his LLC interest is $230,000, and his at-risk amount is $184,000. His share of losses from Solomon for 2015 is $299,000, all of which is passive. He has another investment that produced $161,000 of passive income during 2015. (Assume there were no distributions or changes in liabilities during the year.)

How much of Solomon’s losses may Tobias deduct in 2015 on his Form 1040? How much of the loss is suspended and what Code provisions cause the suspensions?

Therefore, Tobias can deduct $ on his return in 2015.

Applicable Provision Deductible Loss Suspended Loss Select§ 465§ 469§ 704(d)Item 1 Overall limitation $ $ Select§ 465§ 469§ 704(d)Item 4 At-risk limitation $ $ Select§ 465§ 469§ 704(d)Item 7 Passive loss limitation $ $

Explanation / Answer

Applicable Provision Deductible Loss Suspended Loss Select§ 465§ 469§ 704(d)Item 1 Overall limitation 230000 69000 Select§ 465§ 469§ 704(d)Item 4 At-risk limitation 184000 46000 Select§ 465§ 469§ 704(d)Item 7 Passive loss limitation 161000 23000

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