1. Several years ago, Drew invested $100,000 in a passive activity, his sole investment venture. On January 1, 2017, his amount at risk in the activity is $25,000. His shares of the income and losses were as follows:

2017 ($34,000)

2018 ($28,000)

2019 $41,000

What are Drew’s deductible and suspended losses in 2017, 2018, and 2019 and what is his 2019 ending At Risk Basis? Consider the at-risk rules as well as the passive loss rules. (Be specific as to the level of the suspended losses – At Risk vs Passive).

2. 
   Peter’s business property (basis = $55,000; FMV = $85,000) is completely destroyed in 2019 by a tornado. State Farm Insurance reimburses him $43,000. Before the consideration of this loss, Peter’s AGI is $115,000. How much can he deduct for 2019?

3. Carrie Corp owns a candlestick-making plant. During 2019, the plant was completely destroyed. The adjusted basis for the plant was $93,000. The FMV was $70,000. The plant was insured for 90% of the FMV, and Carrie recovered this amount under the insurance policy. How much can the Corp deduct for 2019?

Answer rating: 100% (QA)

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