Required information [The following information applies to the questions displayed below.] 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 $154,000 tax basis in his LLC interest that includes his $141,000 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 $154,000. 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 $179,000. As a partner in the Riverwoods Partnership, he also has year 1, Schedule K- 1 passive income of $10,000. Farell is single and has no other sources of business income or loss. Note: Leave no answer blank. Enter zero if applicable. Assume Farell is deemed to be an active participant in Sierra Vista. Required: c-1. Determine how much of the Sierra Vista loss he will ultimately be able to deduct on his tax return for year 1. c-2. List the losses suspended due to tax-basis, at-risk, and passive activity loss limitations. c-1. Deductible loss c-2. Losses suspended by tax basis limitation c-2. Losses suspended by at-risk limitation c-2. Losses suspended by passive activity loss limitation
Required information [The following information applies to the questions displayed below.] 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 $154,000 tax basis in his LLC interest that includes his $141,000 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 $154,000. 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 $179,000. As a partner in the Riverwoods Partnership, he also has year 1, Schedule K- 1 passive income of $10,000. Farell is single and has no other sources of business income or loss. Note: Leave no answer blank. Enter zero if applicable. Assume Farell is deemed to be an active participant in Sierra Vista. Required: c-1. Determine how much of the Sierra Vista loss he will ultimately be able to deduct on his tax return for year 1. c-2. List the losses suspended due to tax-basis, at-risk, and passive activity loss limitations. c-1. Deductible loss c-2. Losses suspended by tax basis limitation c-2. Losses suspended by at-risk limitation c-2. Losses suspended by passive activity loss limitation
Chapter21: Partnerships
Section: Chapter Questions
Problem 33P
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![Required information
[The following information applies to the questions displayed below.]
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 $154,000 tax basis in his
LLC interest that includes his $141,000 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
$154,000. 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
$179,000. As a partner in the Riverwoods Partnership, he also has year 1, Schedule K-
1 passive income of $10,000. Farell is single and has no other sources of business
income or loss.
Note: Leave no answer blank. Enter zero if applicable.
Assume Farell is deemed to be an active participant in Sierra Vista.
Required:
c-1. Determine how much of the Sierra Vista loss he will ultimately be able to deduct on his tax return
for year 1.
c-2. List the losses suspended due to tax-basis, at-risk, and passive activity loss limitations.
c-1. Deductible loss
c-2. Losses suspended by tax basis limitation
c-2. Losses suspended by at-risk limitation
c-2. Losses suspended by passive activity loss limitation](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F9c379d09-496d-4b84-b89e-e2d398fa4380%2Fc7ee1799-8a49-4d89-a16b-69c52fc226a1%2Ftnubj9_processed.png&w=3840&q=75)
Transcribed Image Text:Required information
[The following information applies to the questions displayed below.]
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 $154,000 tax basis in his
LLC interest that includes his $141,000 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
$154,000. 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
$179,000. As a partner in the Riverwoods Partnership, he also has year 1, Schedule K-
1 passive income of $10,000. Farell is single and has no other sources of business
income or loss.
Note: Leave no answer blank. Enter zero if applicable.
Assume Farell is deemed to be an active participant in Sierra Vista.
Required:
c-1. Determine how much of the Sierra Vista loss he will ultimately be able to deduct on his tax return
for year 1.
c-2. List the losses suspended due to tax-basis, at-risk, and passive activity loss limitations.
c-1. Deductible loss
c-2. Losses suspended by tax basis limitation
c-2. Losses suspended by at-risk limitation
c-2. Losses suspended by passive activity loss limitation
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