Cash flow and has an unusual obsession

Assignment Help Financial Accounting

Reference no: EM13864813

In December of 2014, you get a call from a potential new client, Ralph who tells you he just fired his old accountant because she told him she doesn’t think he will be able to deduct his losses from ABC Partnership LLC in 2014. Ralph purchased a 10% interest in ABC Partnership in 2012 for $50,000. You request copies of his K-1s from ABC Partnership which report Ralph's income/(losses) as follows:

2012 5,000

2013 (65,000)

ABC Partnership has told Ralph he should expect a loss of approximately $10,000 in 2014. He materially participates in the operations and doesn’t understand why his losses would be limited. He has no problems with his cash flow and has an unusual obsession with legally paying as little taxes as possible. Is there anything Ralph can do to get a deduction for the ABC losses in 2014?

Reference no: EM13864813

Questions Cloud

Find the equilibrium output of both firms : Q.1There are two firms in the market. One has lower costs than the other. Assume they compete within the market in a Cournot game. Find the equilibrium output of both firms, the market- learing price, the profit each firm earns, and consumer surplu..

Create sophisticated transactions and investment vechicles : Investment advisers and tax professionals are continuously striving to create sophisticated transactions and investment vechicles (i.e., tax advantaged investments) that are designed to provide economic benefits to investors by reducing their taxes.

Journal entries for the collection of accounts receivable : Inventory that cost $550 is sold for $950, with terms of 2/10, n/30. Prepare the journal entries for the collection of the accounts receivable assuming that it occurs during the discount period.

Distinguishes tax shelter from tax planning : In 1934, Judge Learned Hand made the statement that a taxpayer, "[M]ay so arrange his affairs that his taxes shall be as low as possible; he is not bound to choose that pattern which will best pay the Treasury; there is not even a patriotic duty to i..

Cash flow and has an unusual obsession : In December of 2014, you get a call from a potential new client, Ralph who tells you he just fired his old accountant because she told him she doesn’t think he will be able to deduct his losses from ABC Partnership LLC in 2014. He materially particip..

Any losses suspended under the at-risk : In 2012 Tony invests $35,000 in an activity for which he is not a material participant. Tony has no other sources of income. Calculate Tony’s deductible loss, basis, and any losses suspended under the at-risk and/or passive activity loss rules each y..

Purpose of the at risk and passive activity loss rules : Explain in your own words the purpose of the at risk and passive activity loss rules. Why were they enacted and what types of activities are they intended to limit/prevent? Give me an example of a situation where a taxpayer would have a loss that is ..

Determine the break-even point in units : Comparative 2012 and 2013 income statements for Dakota Products Inc. follow: DAKOTA PRODUCTS INC. Comparative Income Statements For Years Ending December 31, 2012 and 2013 2012 2013 Unit sales 6,000 9,000 Sales revenue $ 78,000 $ 117,000 Expenses (70..

Write project report on your chosen multinational enterprise : Write the Project Report on your chosen Multinational Enterprise. Provide the full Project Report on your chosen Multinational Enterprise making use of the material from the whole unit that is most relevant to your chosen case.

User Account

All Pages