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26 May, 10:09

lia acquired passive Activity A in January 2014 and passive Activity B in July 2016. Until 2017, Activity A was profitable. Activity A produced a loss of $190,000 in 2017 and a loss of $190,000 in 2018. She had passive income from Activity B of $80,000 in 2017, and $55,000 in 2018. How much of the net passive losses may she deduct in 2017 and 2018 respectively

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  1. 26 May, 12:54
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    Lia may deduct $110,000 and $135,000 of the net passive losses in 2017 and 2018 respectively.

    Explanation:

    2017 Passive Activity Limitations $190,000

    Passive Income ($80,000) - loss allowed to the extent of passive income

    Suspended Passive Activity Limitations $110,000

    2018 Passive Activity Limitations $190,000

    Passive Income ($55,000) - loss allowed to the extent of passive income

    Suspended Passive Activity Limitations $135,000

    $245,000 Suspended Passive Activity Limitations
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