4 4 ") TBS-02438 Show Explanation EXHIBITS Year 1 Income and Losses Year 2 Income and Loss Projection A Year 2 Income and Loss Projection B Year 2 Income and Loss Projection C Harold Harrison, a single individual taxpayer, has income from several sources, including his salary from his full-time professional job, investment income, and rental property. Harold is also an active general partner in ABC Partnership and a limited partner in XYZ Partnership. Harold expects the Year 2 income and losses from his various sources to remain approximately the same as the Year 1 amounts other than the income or loss from his limited partnership interest. He is also considering selling his limited partnership interest at the end of Year 2 (assuming zero gain or loss on the sale). Harold's Year 1 income and losses and projected Year 2 income and losses are provided in the exhibits. Harold has no suspended losses from any loss limitations prior to Year 1 and has sufficient tax basis and at-risk basis in his partnership interests to pass through any partnership losses to his individual income tax return. Using the Year 1 information and Year 2 projections provided in the exhibits, complete the table below. Enter the amount of Harold's taxable gross income for each Year 2 projection in column B. Enter the amount of the cumulative suspended passive activity loss (PAL) at the end of Year 2 in column C and the amount of loss that is suspended (carried forward) to Year 3 due to the excess business loss limitation in column D. Enter all amounts as positive, whole numbers. If the amount is zero, enter a zero (0). A B C D Loss Carryforward ’ Due to Excess Taxable Gross Cumulative Business Loss Income Suspended PAL Limitation 2 Year 2 Income and Loss Projection A $445,000 $300,000 $0 = 3 Year 2 Income and Loss Projection B $135,000 $0 $0 = 4 Year 2 Income and Loss Projection C $106,000 $0 $21,000 &
