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 2 years ago
Next > < Previous

Related Solutions

In 2018, Robert had the following income and losses from four passive activities: Activity 1 $(20,000)...
In 2018, Robert had the following income and losses from four passive activities: Activity 1 $(20,000) Activity 2 (10,000) Activity 3 (5,000) Activity 4 33,000 Activity 4 had $10,000 of passive losses that are carried over from a prior year. Robert also had wages of $110,000. How much income or loss does Robert have from the four activities? How are the suspended PALs allocated? If Activity 1 were sold at an $18,000 gain, what would be the total income or...
Given that losses from passive activities can only offset income from passive activities unless the passive...
Given that losses from passive activities can only offset income from passive activities unless the passive activity is sold, what types of activities are not considered to be passive? Name at least three ways (tests) a taxpayer may be treated as an active participant in an activity.
3) Given that losses from passive activities can only offset income from passive activities unless the...
3) Given that losses from passive activities can only offset income from passive activities unless the passive activity is sold, what types of activities are not considered to be passive? Name at least three ways (tests) a taxpayer may be treated as an active participant in an activity. Learning Objective: 07-04 Apply tax-basis, at-risk, and passive activity loss limits to losses from passive investments 4) During all of 2018, Mr. and Mrs. Clay lived with their four children (all are...
B is single and reports the following items of income and deductions for the current year:...
B is single and reports the following items of income and deductions for the current year: Salary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 50,000 Net long-term capital gain on sale of investment property. . . . . ....
A taxpayer has the following gains and losses from property transactions in the current year: $40,000...
A taxpayer has the following gains and losses from property transactions in the current year: $40,000 Section 1231 gain $25,000 Section 1231 loss $12,000 Long-term capital gain $9,000 Short-term capital loss. How are these transactions treated for tax purposes if the taxpayer recognized an $8,000 Section 1231 loss in the previous tax year? $18,000 long-term capital gain $15,000 Section 1231 gain; $3,000 short-term capital loss $8,000 ordinary income from look-back; $10,000 long-term capital gain $8,000 ordinary income from look-back; $7,000...
Bullwinkle Corporation, an S corporation, reports the following results for the current year: Ordinary income =...
Bullwinkle Corporation, an S corporation, reports the following results for the current year: Ordinary income = $40,000 Long-term capital gain= $18,000 Section 1231 gain = $8,000 Short-term capital loss= $14,000 Bullwinkle's AAA and accumulated E&P balances at the beginning of the year are $40,000 and $30,000, respectively. Bullwinkle made a $70,000 cash distribution to its sole shareholder, Maryann, on June 1 and a second $70,000 cash distribution on December 1. Maryann's basis in her Bullwinkle Corporation stock on January 1...
During 2016, Henry reported the following income and loss: Activity X……………………………………..$50,000 loss Activity Y……………………………………..$20,000 income Both...
During 2016, Henry reported the following income and loss: Activity X……………………………………..$50,000 loss Activity Y……………………………………..$20,000 income Both Activity X and Activity Y are nonrental passive activities as to Henry. Henry purchased Activity X in 1988 and Activity Y in 1994. How much, if any, passive activity loss will be carried over to 2017?a. $50,000.B. $30,000. c.$20,000.d.   $0. My answer is (b)30,000. Since there is a 50,000 loss-25,000 passive loss limit =25,000- 20,000income =5,000+25,000=30,000. Is this correct and if not could you...
The partnership of Dennis and Grover reports the following​ information: • Mike Dennis withdrew cash of...
The partnership of Dennis and Grover reports the following​ information: • Mike Dennis withdrew cash of $151,000 for personal use. • Frank Grover withdrew cash of $128,000 during the year. • Net income is $268,000. The first $134,000 is shared based on the partner capital investments ​(Dennis $108,000 and Grover $160,000​). The next $100,000 is shared based on partner​ service, with Dennis receiving 60 percent and Grover receiving 40 percent. The remainder is shared equally. Journalize the entries on December...
Xie Company identified the following activities, costs, and activity drivers for this year. The company manufactures...
Xie Company identified the following activities, costs, and activity drivers for this year. The company manufactures two types of go-karts: Deluxe and Basic. Activity Expected Costs Expected Activity Handling materials $ 710,000 100,000 parts Inspecting product 985,000 1,500 batches Processing purchase orders 190,000 700 orders Paying suppliers 260,000 500 invoices Insuring the factory 385,000 40,000 square feet Designing packaging 160,000 2 models Assume that the following information is available for the company’s two products for the first quarter of this...
Xie Company identified the following activities, costs, and activity drivers for this year. The company manufactures...
Xie Company identified the following activities, costs, and activity drivers for this year. The company manufactures two types of go-karts: Deluxe and Basic. Activity Expected Costs Expected Activity Handling materials $ 675,000 100,000 parts Inspecting product 950,000 1,500 batches Processing purchase orders 155,000 700 orders Paying suppliers 225,000 500 invoices Insuring the factory 350,000 40,000 square feet Designing packaging 125,000 2 models     Required: 1. Compute a single plantwide overhead rate for the year, assuming that the company assigns overhead...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT