Farell is a member of Sierra Vista LLC. Although Sierra Vista is involved in a number of different business ventures, it is not currently involved in real estate either as an investor or as a developer. On January 1, year 1, Farell has a $152,000 tax basis in his LLC interest that includes his $135,000 share of Sierra Vista's general liabilities. By the end of the year, Farell's share of Sierra Vista's general liabilities have increased to $152,000. Because of the time he spends in other endeavors, Farell does not materially participate in Sierra Vista. His share of the Sierra Vista losses for year 1 is $189,000. As a partner in the Riverwoods Partnership, he also has year 1, Schedule K-1 passive income of $14,000. Farell is single and has no other sources of business income or loss. Note: Leave no answer blank. Enter zero if applicable. Problem 20-76 Part d (Algo) d. Assuming the original facts and that Farell is deemed to be an active participant in Sierra Vista, and he also has a $281,000 loss from a sole proprietorship, determine how much total trade or business loss Farell will deduct on his return in year 1. Answer is complete but not entirely correct. Loss deductible $ 259,000
Farell is a member of Sierra Vista LLC. Although Sierra Vista is involved in a number of different business ventures, it is not currently involved in real estate either as an investor or as a developer. On January 1, year 1, Farell has a $152,000 tax basis in his LLC interest that includes his $135,000 share of Sierra Vista's general liabilities. By the end of the year, Farell's share of Sierra Vista's general liabilities have increased to $152,000. Because of the time he spends in other endeavors, Farell does not materially participate in Sierra Vista. His share of the Sierra Vista losses for year 1 is $189,000. As a partner in the Riverwoods Partnership, he also has year 1, Schedule K-1 passive income of $14,000. Farell is single and has no other sources of business income or loss. Note: Leave no answer blank. Enter zero if applicable. Problem 20-76 Part d (Algo) d. Assuming the original facts and that Farell is deemed to be an active participant in Sierra Vista, and he also has a $281,000 loss from a sole proprietorship, determine how much total trade or business loss Farell will deduct on his return in year 1. Answer is complete but not entirely correct. Loss deductible $ 259,000
Chapter14: Property Transact Ions: Capital Gains And Losses, § 1231, And Recapture Provisions
Section: Chapter Questions
Problem 65P
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Transcribed Image Text:Farell is a member of Sierra Vista LLC. Although Sierra Vista is involved in a number of different business ventures, it is not
currently involved in real estate either as an investor or as a developer. On January 1, year 1, Farell has a $152,000 tax
basis in his LLC interest that includes his $135,000 share of Sierra Vista's general liabilities. By the end of the year, Farell's
share of Sierra Vista's general liabilities have increased to $152,000. Because of the time he spends in other endeavors,
Farell does not materially participate in Sierra Vista. His share of the Sierra Vista losses for year 1 is $189,000. As a partner
in the Riverwoods Partnership, he also has year 1, Schedule K-1 passive income of $14,000. Farell is single and has no
other sources of business income or loss.
Note: Leave no answer blank. Enter zero if applicable.
Problem 20-76 Part d (Algo)
d. Assuming the original facts and that Farell is deemed to be an active participant in Sierra Vista, and he also has a $281,000 loss
from a sole proprietorship, determine how much total trade or business loss Farell will deduct on his return in year 1.
Answer is complete but not entirely correct.
Loss deductible
$ 259,000
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