Deductible loss under the passive activity rules

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Pamela earns a yearly salary of $150,000. During year 1 she invested $80,000 for a 20% interest in a passive activity. Operations of the activity in year 1 resulted in a loss of $500,000, of which Pamela’s share is $100,000. In year 2, the activity generated income of $300,000 of which Pamela’s share is $60,000. For years year 1 and year 2, what is Pamela’s deductible loss under the passive activity rules, deductible loss under the at risk rules, suspended loss under the passive activity rules, suspended loss under the at risk rules, and adjusted basis in the passive activity at the end of each year (year 1 and year 2).

Reference no: EM13831252

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