Individual Taxes: Reporting of Items from Pass-Through Entities

Question 1

Individuals may offset

Answer 1

up to $25,000 ($50,000 if married filing jointly) of ordinary income with losses from rental real estate activities

This exemption is reduced (but not below zero) by 50% of the amount by which the adjusted gross income of the taxpayer for the year exceeds $100,000

Question 2

A taxpayer’s loss deduction from an S corporation

Answer 2

is limited to amounts “at risk” in a trade or business or income-producing activity under IRC Section 465 losses

At risk = Basis + loans

Losses are limited to Basis
New Basis = Old Basis minus distributions

Question 3

When a taxpayer disposes ownership in a Partnership during the year

Answer 3

he may take all of the loss up to the amount of his basis in the partnership