Author: admin

1.Explain the difference between materia lly participating
and actively participating in an activity. When is the active participation
rest used?
2. Are the losses suspended under the passive loss rules
lost forever? Explain.

a. What requirements must be met in order for a taxpayer to
deduce up co $25,000 of passive losses from rental real estate activities
against active and portfolio income?
b. What requirements must be met in order for a real estate
rental activity to be considered a real estate business chat is not subject co
the passive loss rules?

1. tests must be met to qualify a loss as deductib le under
the casua lty loss provisions? Discuss the application of each of these tests.
2. Explain how a taxable gain on property can be realized
because of a casua lty event such as a fire or theft. How are these gains
created?

During the current year, Rulon ‘s toiler overflowed due to a
pipe breaking during a nationally declared earthquake disaster. Rulon was at
work when the earthquake hie, and by the time he returned, the water had
flooded the basement, causing damage to the carpet, walls, and ceiling. The
cost of repairing the damage was $9,000. Rulon has homeowners insurance that
will cover half of the damage. However, because he has already had claims this
year, Rulon does not want to report the incident co his insurance company for
fear of a large increase in insurance rates. Instead, Rulon wants to deduce the
loss as a casua lty loss on his tax return . His AGI for this year is $50,000,
and he has other itemized deductions of $6,000. Rulon is single. What amount of
the casualty loss may he deduce?

1.Compare and contrast the computational rules for deducting
casua lty losses on persona l-use property with casualty losses incurred on
business or investment property.
2. Under what circumstances may a loss arising from a casua
lty or theft be deducted in a year other than the year in which the loss
occurs?

1.For individuals, how are casualty losses on persona l-use
property reported on the tax return? How are casualty losses on business
property reported?
2. How are excess business losses calculated? Does the
limitation apply to passive activities as well as nonpassive activities?

ls the $100 floor on personal-use casualty losses imposed on
each individual loss item if more than one item of property is destroyed in a
single casualty? ls the floor imposed before or after the casualty gains are
netted against the casualty losses?