Assume that a taxpayer has $50,000 at risk in an activity at the beginning of...
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Accounting
Assume that a taxpayer has $ at risk in an activity at the beginning of year one, and during the year has losses from the atrisk activity of $ In year two the taxpayer receives a $ 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 atrisk amount by $
c Reduce the taxpayers atrisk amount by $ and include $ in the taxpayers gross income.
d Include the entire distribution of $ in the taxpayers gross income.
e Both b and d
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