Question

Juggernaut acquired a passive partnership activity in January of 2015. His at-risk basis at the beginning of 2018 was $65,000. Juggernaut also owns a rental property that generated income of $23,000 in 2018 and $19,000 in 2019. Juggernaut’s share of income and loss from the partnership activity is: 2018 <$79,000>
2019 32,000

Complete the following tables.

(apply both at risk and passive rules together) (3 points)

FOR 2018

Deductible under at-risk provisions                             ____________________

Adjusted basis at 12/31/18                                          ____________________

Suspended under at-risk provisions                             ____________________

Deductible under passive loss provisions                     ____________________

Suspended under passive loss provisions                     ____________________

FOR 2019

Deductible under at-risk provisions                             ____________________

Adjusted basis at 12/31/19                                          ____________________

Suspended under at-risk provisions                             ____________________

Deductible under passive loss provisions                     ____________________

Suspended under passive loss provisions                     ____________________

Answer 1

Particulars	2018	2019
Deductible under At Risk Provisions	65000	14000
Adjusted basis at year end	65000	0
Suspended under at risk provisions	14000	14000
Deductible under Passive loss provisions	23000	51000
Suspended under Passive loss provisions	56000	5000
Working Notes
1. Amount deductible under At Risk provisions = Stock Basis + Loan Basis
At the beginning of the year, Given the Maximum Deductible amount
under AT Risk Rules i.e. $ 65000
2. Under At Risk Rules, Amount of Loss allowed to be adjusted must be lesser
than or equal to the Maximum Deductible amount under At Risk Rules and
if there is loss suffered more than the deductible amount than the differential
loss can be carried forward to coming years until there is sufficient amount
of At risk Basis
Here, loss incurred = $ 79000 but the company is having the deductible At Risk
basis $ 65000 hence in 2018 Adjusted loss is $ 65000 and balance $ 14000
must be sufficient At risk basis available.
In 2019, no investment made or loan given hence there is no increase in tax
basis and therefore, no amount is adjusted and the entire amount is
suspended for adjustment in future years
3. under Passive Rules provisions, Passive losses are deductible only upto
the amount of Passive Income. Rental Income is also included under passive income
Hence,
		2018	2019
Passive Income
Investment		0	32000
Rental Income		23000	19000
Total Passive Income (A)		23000	51000
Passive Losses (B)		79000	0
Amount Deductible (C = A-B, Max A)		23000	51000
Suspended Amount (B-C)		56000	5000