Farell is a member of Sierra Vista LLC. Although Sierra Vista is involved in a number of different business ventures, it is not currently involved in real estate either as an investor or as a developer. On January 1, year 1, Farell has a $100,000 tax basis in his LLC interest that includes his $90,000 share of Sierra Vista's general debt obligations. By the end of the year, Farell's share of Sierra Vista's general debt obligations has increased to $100,000. Because of the time he spends in other endeavors, Farell does not materially participate in Sierra Vista. His share of the Sierra Vista losses for year 1 is $120,000. As a partner in the Riverwoods Partnership, he also has year 1, Schedule K-1 passive income of $5,000. Farell is single and has no other sources of business income or loss. (Leave no answer blank. Enter zero if applicable.)
Farell is a member of Sierra Vista LLC. Although Sierra Vista is involved in a number of different business ventures, it is not currently involved in real estate either as an investor or as a developer. On January 1, year 1, Farell has a $100,000 tax basis in his LLC interest that includes his $90,000 share of Sierra Vista's general debt obligations. By the end of the year, Farell's share of Sierra Vista's general debt obligations has increased to $100,000. Because of the time he spends in other endeavors, Farell does not materially participate in Sierra Vista. His share of the Sierra Vista losses for year 1 is $120,000. As a partner in the Riverwoods Partnership, he also has year 1, Schedule K-1 passive income of $5,000. Farell is single and has no other sources of business income or loss. (Leave no answer blank. Enter zero if applicable.)
Chapter21: Partnerships
Section: Chapter Questions
Problem 61P
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![Required information
[The following information applies to the questions displayed below.]
Farell is a member of Sierra Vista LLC. Although Sierra Vista is involved in a number of different
business ventures, it is not currently involved in real estate either as an investor or as a
developer. On January 1, year 1, Farell has a $100,000 tax basis in his LLC interest that includes
his $90,000 share of Sierra Vista's general debt obligations. By the end of the year, Farell's share
of Sierra Vista's general debt obligations has increased to $100,000. Because of the time he
spends in other endeavors, Farell does not materially participate in Sierra Vista. His share of the
Sierra Vista losses for year 1 is $120,000. As a partner in the Riverwoods Partnership, he also has
year 1, Schedule K-1 passive income of $5,000. Farell is single and has no other sources of
business income or loss. (Leave no answer blank. Enter zero if applicable.)
d. Assuming Farell is deemed to be an active participant in Sierra Vista and he has a $280,000 loss from a sole
proprietorship, determine how much total trade or business loss Farell will deduct on his return in year 1.
Loss deductible](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F7449edce-18fa-48ff-9928-3bbfe02f39fb%2F44d5ab1e-1695-4839-993b-bdd3039a18bd%2Fa5gey7_processed.png&w=3840&q=75)
Transcribed Image Text:Required information
[The following information applies to the questions displayed below.]
Farell is a member of Sierra Vista LLC. Although Sierra Vista is involved in a number of different
business ventures, it is not currently involved in real estate either as an investor or as a
developer. On January 1, year 1, Farell has a $100,000 tax basis in his LLC interest that includes
his $90,000 share of Sierra Vista's general debt obligations. By the end of the year, Farell's share
of Sierra Vista's general debt obligations has increased to $100,000. Because of the time he
spends in other endeavors, Farell does not materially participate in Sierra Vista. His share of the
Sierra Vista losses for year 1 is $120,000. As a partner in the Riverwoods Partnership, he also has
year 1, Schedule K-1 passive income of $5,000. Farell is single and has no other sources of
business income or loss. (Leave no answer blank. Enter zero if applicable.)
d. Assuming Farell is deemed to be an active participant in Sierra Vista and he has a $280,000 loss from a sole
proprietorship, determine how much total trade or business loss Farell will deduct on his return in year 1.
Loss deductible
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