Instructions:

Problem 1 In 2018, Matthew contributes 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 Dividends Capital gains Ordinary loss $1,000 600 1,800 (8,650) CLP had no liabilities. What are Matthew's initial basis, allowed losses, and ending at-risk amount? Problem 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 eamed $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? Calculate the initial basis, allowed losses, and ending at-risk amounts. Explain how to treat a loss on a federal income tax return. o Calculate what can be deducted on a final income tax return. Calculate the loss disallowed by at-risk rules and how much of the loss is disallowed by passive loss rules! Explain the tax effect in a specified scenario for the last year and the current year. Calculate itemized deductions for AMT purposes and identify the amount of the AMT adjustment