Question

lia acquired passive Activity A in January 2014 and passive Activity B in July 2016. Until 2017, Activity A was profitable. Activity A produced a loss of $190,000 in 2017 and a loss of $190,000 in 2018. She had passive income from Activity B of $80,000 in 2017, and $55,000 in 2018. How much of the net passive losses may she deduct in 2017 and 2018 respectively

Answer 1

Answer:

Lia may deduct $110,000 and $135,000 of the net passive losses in 2017 and 2018 respectively.

Explanation:

2017 Passive Activity Limitations $190,000

Passive Income ($80,000) – loss allowed to the extent of passive income

Suspended Passive Activity Limitations $110,000

2018 Passive Activity Limitations $190,000

Passive Income ($55,000) – loss allowed to the extent of passive income

Suspended Passive Activity Limitations $135,000

$245,000 Suspended Passive Activity Limitations