Problem 11-52 (Algorithmic) (LO. 2, 3, 7)

Five years ago Gerald invested $142,000 in a passive activity, his sole investment venture. On January 1, 2019, his amount at risk in the activity was $28,400. His shares of the income and losses were as follows:

Year	Income (Loss)
2019	($42,600)
2020	(28,400)
2021	48,400

Gerald holds no suspended at-risk or passive activity losses at the beginning of 2019.

If an answer is zero, enter "0".

a. If losses were limited only by the at-risk rules, how much can Gerald deduct in 2019 and 2020?

Year	Loss	Allowed	Suspended
2019	($42,600)
2020	($28,400)
Total

b. Refer to the information in part (a) above. If losses were limited by the at-risk and the passive activity loss rules, how much would Gerald be able to deduct in 2019 and 2020?

Of the allowable at-risk loss for 2019, Gerald may deduct $ in 2019 due to the passive loss rules and of the allowable at-risk loss from 2020, Gerald may deduct $fill in the blank $ in 2020 due to the passive loss rules.

c. Assuming Gerald has $48,400 income in 2021, (and considering both at-risk and passive activity loss rules), what is the amount of Gerald's suspended losses at the end of 2021?

• Suspended under the at-risk rules:
• Suspended under the passive activity loss rules:

What is his taxable income for 2021? At the end of 2021, what is the amount of Gerald's adjusted basis in the activity?