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Exam 13: At-Riskpassive Activity Loss Rules and the Individual Alternative Minimum Tax

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Question 41

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Cory sells his entire interest in a rental property in which he actively participated at a gain of $12,000.The activity has a current year loss of $4,800 and $16,000 in prior year suspended losses.During the year,Cory has $80,000 in salary.What is Cory's AGI for the year?

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$71,200.The gain on the sale of $12,000 ...

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Question 42

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Catherine purchased furniture and fixtures (7-year property) for her shop for $80,000 in May.What AMT depreciation adjustment is required for the year?

A) $0.
B) $2,864.
C) $8,568.
D) $11,432.

E) B) and C)
F) None of the above

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Question 43

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Adjustments to AMTI can be either positive or negative.

The term "active participation" is used to determine:

Generally,the gains and losses recognized for regular tax purposes are the same amount as the gains and losses recognized for AMT purposes.

Paul invests $10,000 cash in an equipment leasing activity for a 15% ownership share in the business.The remaining 85% owner is Amanda.Amanda contributes $10,000 and personally borrows $75,000 that she also invests in the business.What are the at-risk amounts for Paul and Amanda? $\begin{array}{llll}&\text { Paul }&\text { Amanda }\\a.&\$ 10,000 & \$ 10,000 \\b.&\$ 10,000 & \$ 85,000 \\c.&\$ 10,00 0 & \$ 73,750 \\d.&\$ 21,250 & \$ 73,750\end{array}$

Sarah is single with no dependents.During 2017,Sarah has $86,000 of taxable income.She has $14,000 of positive AMT adjustments and $24,000 of tax preferences.Sarah does not itemize her deductions but takes the standard deduction.Calculate Sarah's AMTI.

AMT depreciation of personal property is calculated using which method?

Identify factors that increase or decrease the at-risk amount.

A taxpayer's share of nonrecourse debt is considered an amount at-risk.

The standard deduction is added back as a positive adjustment to AMTI.

Two equal partners involved in a passive activity with identical passive losses from that activity may be allowed to deduct different amounts of the losses on their own tax returns.

Which of the following decreases a taxpayer's at-risk amount?