Question

In: Accounting

In the current year Mike reports income and losses from the following​ activities: Activity X $27,000...

In the current year Mike reports income and losses from the following​ activities:

Activity X

$27,000

Activity Y

(16,000)

Activity Z

(23,000)

Salary

175,000

Activities​ X, Y, and Z are all passive with respect to Mike. Activity Z has $35,000 in passive losses which are carried over from the prior year. In the current year Mike sells activity Z for a taxable gain of $22,000.

Requirement

a. What is the amount of loss that Mike may deduct and what is the amount that must be carried over in the current​ year? ​(Enter a​ "0" for amounts with a zero​ balance.)

Loss deductible in current year

Amount carried over to next year

Requirement b. Based solely on the amounts​ above, compute Mike​'s AGI for the current year.

Mike's AGI for the current year is

.

In Tax Accounting   

Solutions

Expert Solution

Particulars Amount
Activity X $27,000.00
Activity Y ($16,000.00)
Activity Z ($23,000.00)
Activity Z B/F ($35,000.00)
captil gain from Activity Z $22,000.00
loss deductible
least of passive income or loss (27000+22000)
$49,000.00
loss deductible in current year $49,000.00
loss to be carried forward
Total loss
op + during the year (35000+23000+16000)
($74,000.00)
passive income $49,000.00
Total loss to be C/F ($25,000.00)
(-74000+49000)
MIKE AGI
salary $1,75,000.00
Activity X $27,000.00
captil gain from Activity Z $22,000.00
Less
Activity Y ($16,000.00)
Activity Z ($23,000.00)
Activity Z B/F ($35,000.00)
Net AGI $1,75,000.00
As total passive loss is greater than passisve income
so only taxable income remains only salary

ekkarill92 answered 1 year ago
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