Damarcus is a 50% owner of Hoop (a business entity). In the current year, Hoop reported a $100,000 business loss. Answer the following questions associated with each of the following alternative scenarios.
a. Hoop is organized as a C corporation and Damaracus works full time as an employee for Hoop. Damarcus has a $20,000 basis in his Hoop stock. How much of Hoop's loss is Damarcus allowed to deduct this year?
b. Hoop is organized as an LLC. Fifty percent of Hoop's loss is allocated to Damarcus. Damarcus works full time for Hoop (he is not considered to be a passive investor in Hoop). Damarcus has a $20,000 basis in his Hoop ownership interest and he also has a $20,000 at risk amount in his investment in Hoop. Damarcus does not report income or loss from any other business activity investments. How much of the $50,000 loss allocated to him by Hoop is Damarcus allowed to deduct this year?
c. Hoop is organized as an LLC. Fifty percent of Hoop's loss is allocated to Damarcus. Damarcus does not work for Hoop at all (he is a passive investor in Hoop). Damarcus has a $20,000 basis in his Hoop ownership interest and he also has a $20,000 at risk amount in his investment in Hoop. Damarcus does not report income or loss from any other business activity investments. How much of the $50,000 loss allocated to him by Hoop is Damarcus allowed to deduct this year?
d. Hoop is organized as an LLC. Fifty percent of Hoop's loss is allocated to Damarcus. Damarcus works full time for Hoop (he is not considered to be a passive investor in Hoop). Damarcus has a $70,000 basis in his Hoop ownership interest and he also has a $70,000 at risk amount in his investment in Hoop. Damarcus does not report income or loss from any other business activity investments. How much of the $50,000 loss allocated to him by Hoop is Damarcus allowed to deduct this year?
e. Hoop is organized as an LLC. Fifty percent of Hoop's loss is allocated to Damarcus. Damarcus does not work for Hoop at all (he is a passive investor in Hoop). Damarcus has a $70,000 basis in his Hoop ownership interest and he also has a $70,000 at risk amount in his investment in Hoop. Damarcus does not report income or loss from any other business activity investments. How much of the $50,000 loss allocated to him by Hoop is Damarcus allowed to deduct this year?
f. Hoop is organized as a LLC. Fifty percent of Hoop's loss is allocated to Damarcus. Damarcus does not work for Hoop at all (he is a passive investor in Hoop). Damarcus has a $20,000 basis in his Hoop ownership interest and he also has a $20,000 at risk amount in his investment in Hoop. Damarcus reports $10,000 of income from a business activity in which he is a passive investor. How much of the $50,000 loss allocated to him by Hoop is Damarcus allowed to deduct this year?