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 $192,000 tax basis in his LLC interest that includes his $176,000 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 $192,000. 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 $223,000. As a partner in the Riverwoods Partnership, he also has year 1, Schedule K-1 passive income of $12,000. 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 $192,000 tax basis in his LLC interest that includes his $176,000 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 $192,000. 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 $223,000. As a partner in the Riverwoods Partnership, he also has year 1, Schedule K-1 passive income of $12,000. 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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[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 $192,000 tax
basis in his LLC interest that includes his $176,000 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 $192,000. 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 $223,000.
As a partner in the Riverwoods Partnership, he also has year 1, Schedule K-1 passive income of $12,000. Farell is single
and has no other sources of business income or loss. (Leave no answer blank. Enter zero if applicable.)
Assume Farell is deemed to be an active participant in Sierra Vista.
c-1. Determine how much of the Sierra Vista loss he will ultimately be able to deduct on his tax return for year 1.
c-2. List the losses suspended due to tax-basis, at-risk, and passive activity loss limitations.
Deductible loss
Losses suspended by tax basis limitation
Losses suspended by at-risk limitation
Losses suspended by passive activity loss limitation](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fcd96efc3-2f98-4cac-898c-7da2d5d05bd8%2Faf926365-55ca-4d80-8b6c-3c19c13da843%2Frvg3tsw_processed.png&w=3840&q=75)
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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 $192,000 tax
basis in his LLC interest that includes his $176,000 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 $192,000. 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 $223,000.
As a partner in the Riverwoods Partnership, he also has year 1, Schedule K-1 passive income of $12,000. Farell is single
and has no other sources of business income or loss. (Leave no answer blank. Enter zero if applicable.)
Assume Farell is deemed to be an active participant in Sierra Vista.
c-1. Determine how much of the Sierra Vista loss he will ultimately be able to deduct on his tax return for year 1.
c-2. List the losses suspended due to tax-basis, at-risk, and passive activity loss limitations.
Deductible loss
Losses suspended by tax basis limitation
Losses suspended by at-risk limitation
Losses suspended by passive activity loss limitation
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