Lenny, a calendar-year taxpayer, is a full-time college professor. In 2021, he invests $50,000 cash in...

 

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Lenny, a calendar-year taxpayer, is a full-time college professor. In 2021, he invests $50,000 cash in exchange for a 25% ownership interest in an internet start-up business. The business has two full-time employees (each employee worked over 2.000 hours in 2021). Lenny only spends 4 hours per month on business affairs. His participation consists of attending a monthly management meeting. Lenny's share of loss from the business is $65,000 in 2021. Lenny also has wages in 2021 from his employment as a college professor of $150,000. a) How much of the loss can Lenny deduct in 2021 on his individual income tax return? b) What is Lenny's at-risk investment in the internet start-up business at December 31, 2021? c) Are any of the losses suspended under the at-risk rules or passive activity rules? If so, how much? Show your computations. Lenny, a calendar-year taxpayer, is a full-time college professor. In 2021, he invests $50,000 cash in exchange for a 25% ownership interest in an internet start-up business. The business has two full-time employees (each employee worked over 2.000 hours in 2021). Lenny only spends 4 hours per month on business affairs. His participation consists of attending a monthly management meeting. Lenny's share of loss from the business is $65,000 in 2021. Lenny also has wages in 2021 from his employment as a college professor of $150,000. a) How much of the loss can Lenny deduct in 2021 on his individual income tax return? b) What is Lenny's at-risk investment in the internet start-up business at December 31, 2021? c) Are any of the losses suspended under the at-risk rules or passive activity rules? If so, how much? Show your computations.

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