Two exceptions to the special passive activity rule for real estate activities provide the whole or partial offset of real estate rental losses against active or portfolio income, even when the business is otherwise regarded as a passive activity.
<h3>Which rules regarding passive activities for rental revenue are exceptions?</h3>
- You have a stake in the yearly commerce or economic activities.
- During the current tax year or at least 2 of the 5 tax years prior, the rental property was utilized primarily in that trade or company.
<h3>Only real estate is subject to passive loss restrictions, right?</h3>
Generally speaking, the following actions can result in passive losses (and income): leasing of equipment. Rental property (though there are some exceptions) a farm or a sole proprietorship in which the taxpayer has no substantial interest.
<h3>How can passive income be balanced?</h3>
Selling off your rental properties will help you make up for your passive losses. You don't actually have to sell the property that's causing the losses to balance them effectively. Any passive income will be offset by losses.
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Answer:
a. 4.94%
b. 11.48%
Explanation:
Here in this question, we are interested in calculating the pretax cost of debt and cost of equity.
We proceed as follows;
a. From the question;
The debt equity ratio = 1.15
since Equity = 1 ; Then
Total debt + Total equity = 1 + 1.15 = 2.15
Mathematically ;
WACC = Cost of equity x Weight of equity + Pretax Cost of debt x Weight of debt x (1-Tax rate)
Where WACC = 8.6%
Cost of equity = 14%
Weight of equity = 1/(total debt + total equity) = 1/(1+1.15) = 1/2.15
Pretax cost of debt = ?
Weight of debt = debt equity ratio/total cost of debt = 1.15/2.15
Tax rate = 21% = 0.21
Substituting these values, we have;
8.6% = 14% x 1/2.15 + Pretax cost of debt x 1.15/2.15 x (1-21%)
8.6% = 14% x 1/2.15 + Pretax cost of debt x 1.15/2.15 x (1-21%)
Pretax cost debt = (8.6%-6.511628%)/(1.15/2.15 x (1-21%))
Pretax cost of debt = 4.94%
b. WACC = Cost of equity x Weight of equity + After tax Cost of debt x Weight of debt
8.6% = Cost of equity x 1/2.15 + 6.1% x 1.15/2.15
Cost of equity = (8.6%-3.26279%)/(1/2.15)
Cost of equity = 11.48%
Answer:
Monthly pay= 5344.67
Explanation:
Giving the following information:
To live comfortably, you decide you will need to save $ 1million by the time you are 65.
Today is your 29th birthday, and you decide to put the same amount into a savings account. If the interest rate is 8%.
How much must you set aside each year?
n= 36
i= 0.08
FV= 1,000,000
We need to use the following formula:
FV= {A*[(1+i)^n-1]}/i
We need to isolate A (monthly pay):
<u>A= (FV*i)/[(1+i)^n-1]</u>
A= (1000000*0.08)/(1.08^36-1)
A= 80000/14.96817184
A= 5344.67
Answer:
The statement is: True.
Explanation:
Motivation is what drives individuals or organizations to achieve their objectives. Leaders must find ways to keep their subordinates constantly incentivized so their productivity level remains at their highest level possible. In some other cases, reaching personal goals is what drives people. In such scenarios <em>pride, self-interest, </em>and <em>success</em> boost individuals' morale pushing them to their limits.
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