Question

Rhonda has an adjusted basis and an at-risk amount of $12,400 in a passive activity at the beginning of the year. She also has a suspended passive activity loss of $2,480 carried over from the prior year. During the current year, she has a loss of $19,840 from the passive activity. Rhonda has no passive activity income from other sources this year. Determine the following items relating to Rhonda's passive activity as of the end of the year. At year-end, Rhonda has the following:
a. Adjusted basis in the passive activity: __________
b. Loss suspended under the at-risk rules: _________
c. Suspended passive activity loss: ___________

Answer 1

Answer:

A. $0

B. $7,440

C. $14,880

Explanation:

a. Based on the information given Rhonda Adjusted basis in the passive activity will be $0

Therefore The Adjusted basis in the passive activity will be $0

b. Calculation to determine the Loss suspended under the at-risk

Loss suspended under the at-risk =$19,840-$12,400

Loss suspended under the at-risk =$7,440

Therefore The Loss suspended under the at-risk will be $7,440

C. Calculation to determine the Suspended passive activity loss

Suspended passive activity loss=$12,400+$2,480

Suspended passive activity loss=Suspended passive activity loss=$14,880

Therefore The Suspended passive activity loss wi be $14,880