Question

eBook Calculator E Print Item Exercise 6-10 (Algorithmic) (LO. 10) Rose dies with passive activity property having an adjusted basis of $82,800, suspended losses of $26,496, and a fair market value at the date of her death of $115,920. Of the $26,496 suspended loss existing at the time of Rose's death, how much is deductible on her final return or by the beneficiary? to $ ; therefore, none of the $26,496 suspended loss is deductible The basis for the property is stepped-up on Rose's final return or by the beneficiary. Foodback Check My Work Any unused passive activity losses are suspended and carried forward to future years to offset passive activity income generated int years. Otherwise, suspended losses may be used only when a taxpayer disposes of his or her entire interest in an activity.

Answer 1

Deduction with respect to the suspended loss on a passive activity held at the time death is available only if suspended loss exceeds unrealized gain on the passive activity.

Unrealized gain = 115920 - $82800= $33,120

Suspended loss=$26496

Here, suspended loss is less than unrealized gain.Hence Rose is ineligible for any deduction for the suspended loss.

The basis for the property is stepped-up to $ 115920 (fairmarket value) therefore, none of the $26496 suspended loss is deductible on Rose's final return or by the beneficiary

ANY DOUBTS OR CORRECTIONS?

JUST LEAVE A COMMENT BELOW

THANK YOU