Problem:
Part A:
Chad Scott contributed $15,000 in company A along with 4 other limited partners. The limited partnership also took out a loan of which Chad portion $50,000. The loan was through Compass Bank, which is actively and regularly engaged in the business of lending money. The property company A purchased with the loan proceeds was purchased from Compass Bank. Chad contributed $25,000 in the company B on January 1, Year 1. Chad does not materially participate in either Company A or Company B. Chad’s share of net income from Company A during Year 1 was $8,000. His share of losses from Company B was $12,000.
a. How much will Chad have to carry-over under the At-Risk Rules
b. In Year 1, how much of Chad’s Passive Activity Loss will he be able to offset against his Passive Activity Income?
c. In year 1 how much will he be suspended
d. How much will Chad have At-Risk for Company A on January 1, Year 2
e. How much will Chad have At-Risk for Company B on January 1, Year 2
Part B:
If Chad had contributed $30,000 in Company B on January 1, Year 1, how much will Chad have to carryover under the At-Risk Rules?
In Year 1 how much of Chad’s Passive Activity Loss will he be able offset against his Passive Activity Income?
In Year 1, how much will he be suspended?
How much will Chad have At-Risk for Company A on January 1, Year 2
How much will Chad have At-Risk for Company B on January 1, Year 2