. Kolt is organized as an LLC taxed as a partnership. Thirty percent of Kolt's loss is allocated to Danni. Danni is not involved in Kolt business activities. Consequently, she is considered to be a passive investor in Kolt. Danni has a $400,000 basis in her Kolt ownership nterest and she also has a $400,000 at-risk amount in her investment in Kolt. Danni does not report income or loss from any other usiness activity investments. How much of the $300,000 loss allocated to her from Kolt is Danni allowed to deduct this year? Allowable deduction of loss
. Kolt is organized as an LLC taxed as a partnership. Thirty percent of Kolt's loss is allocated to Danni. Danni is not involved in Kolt business activities. Consequently, she is considered to be a passive investor in Kolt. Danni has a $400,000 basis in her Kolt ownership nterest and she also has a $400,000 at-risk amount in her investment in Kolt. Danni does not report income or loss from any other usiness activity investments. How much of the $300,000 loss allocated to her from Kolt is Danni allowed to deduct this year? Allowable deduction of loss
Chapter13: Choice Of Business Entity—general Tax And Nontax Factors/formation
Section: Chapter Questions
Problem 47P
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Question
N3.
Transcribed Image Text:Danni is a single 30 percent owner of Kolt (a business entity). In the current year, Kolt reported a $1,000,000 business loss.
Answer the following questions associated with each of the following alternative scenarios: (Leave no answer blank.
Enter zero if applicable.)
a. Kolt is organized as a C corporation and Danni works 20 hours a week as an employee for Kolt. Danni has a $200,000 basis in her
Kolt stock. How much of Kolt's loss is Danni allowed to deduct this year against her other income?
Allowable deduction of loss
b. Kolt is organized as an LLC taxed as a partnership. Thirty percent of Kolt's loss is allocated to Danni. Danni works 20 hours a week
on Kolt business activities (she is not considered to be a passive investor in Kolt). Danni has a $400,000 basis in her Kolt ownership
interest and she also has a $400,000 at-risk amount in her investment in Kolt. Danni does not report income or loss from any other
business activity investments. How much of the $300,000 loss allocated to her from Kolt is Danni allowed to deduct this year?
Allowable deduction of loss
c. Kolt is organized as an LLC taxed as a partnership. Thirty percent of Kolt's loss is allocated to Danni. Danni is not involved in Kolt
business activities. Consequently, she is considered to be a passive investor in Kolt. Danni has a $400,000 basis in her Kolt ownership
interest and she also has a $400,000 at-risk amount in her investment in Kolt. Danni does not report income or loss from any other
business activity investments. How much of the $300,000 loss allocated to her from Kolt is Danni allowed to deduct this year?
Allowable deduction of loss
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