Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. assume that a taxpayer has $50,000 at risk in an a

Assume that a taxpayer has $50,000 at risk in an activity at the beginning of...

80.2K

Verified Solution

Question

Accounting

Assume that a taxpayer has $50,000 at risk in an activity at the beginning of year one, and during the year has losses from the at-risk activity of $30,000. In year two the taxpayer receives a $25,000 distribution from the activity which has no other activity during year two. How should the distribution be treated for tax purposes in year two?
a) The distribution has no effect for tax purposes since there was no activity during year two.
b) Reduce the taxpayers at-risk amount by $25,000.
c) Reduce the taxpayers at-risk amount by $20,000 and include $5,000 in the taxpayers gross income.
d) Include the entire distribution of $25,000 in the taxpayers gross income.
e) Both b. and d.

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Q

describe the auto regulation of GFR and list extrinsic influences that affect GFR

Medical Sciences
Q

Process Function Photosynthesis Energy capture Respiration 1 Bl inks Use the chart to answer the...

Biology
Q

T A Carnot engine whose sink is at 300 K has an efficiency of 40...

Physics
Q

21 Select the correct answer from the drop down menu Capsule A Capsule B Capsule...

Geometry
Q

A sample of bacteria is decaying according to a half-life model. If the sample begins...

Basic Math
Q

Find the following indefinite integral Sex e 8x 49 0 dx O 0 e 8x...

Calculus
Q

Which of the following could be an event in REA data models? Multiple Choice ...

Accounting
Q

On January 1, All City Services has the following balances: Accounts Receivable -$22,000...

Accounting
Q

Logistics Solutions provides order fulfillment services for dot.com merchants. The company maintains warehouses that stock...

Accounting
Q

If interest rates rise, you would expect the value/price of a bond (with a fixed...

Finance
Q

QUESTIONS The market price of a bond is $1.236.94, it has 14 years to maturity....

Finance
Q

Question 2 Dr. Leeper computed a ratio of firm value (which he defined as market...

Finance