1. In 2019, Matthew contributed equipment with an adjusted basis of $40,000 and an FMV of $36,000 to Construction Limited Partnership (CLP) in return for a 3% limited partnership interest. Matthew's share of CLP income and losses for the year were as follows:

Interest $1,000

Dividends 600

Capital gains 1,800

Ordinary loss (8,650)

CLP had no liabilities.

What are Matthew's initial basis, allowed losses, and ending at-risk amount?

2. During the current year, Ben worked 1,500 hours as a tax consultant and 500 hours as a real estate agent. His one other employee (his wife) worked 350 hours in the real estate business.Ben earned $60,000 as a tax consultant, and together the couple lost $18,000 in the real estate business.

How should Ben treat the loss on his federal income tax return?

3. Chrystal died owning an interest in a passive activity property.The property had an adjusted basis of $270,000, a fair market value of $284,000, and suspended losses of $25,000.

What can be deducted on her final income tax return?

6. Howard has a $76,000 loss from an investment in a partnership in which he does not participate. His basis in the interest is $70,000.

a.How much of the loss is disallowed by the at-risk rules?

b.How much of the loss is disallowed by the passive loss rules?

5. Roberta gave her daughter a passive activity last year that had an adjusted basis of $37,500. The activity had suspended losses of $17,500 and a fair market value of $60,000. In the current year, her daughter realized an income of $9,000 from the passive activity.

What is the tax effect on Roberta and her daughter last year and in the current year?