Ask Question
BusinessBusiness
10 March, 03:05

Grace acquired an activity four years ago. The loss from the activity is $50,000 in the current year (at-risk basis of $40,000 as of the beginning of the year). Without considering the loss from the activity, she has gross income of $140,000. If the activity is a convenience store and Grace is a material participant, what is the effect of the activity on her taxable income

+2
Answers (1)
  1. 10 March, 06:37
    0
    Grace taxable income during the year = $100,000

    Explanation:

    Given:

    Current year loss = $50,000

    The beginning of the year = $40000 (At risk basis)

    Gross income during the year = $140,000

    Grace taxable income during the year = ?

    Computation of Grace taxable income during the year:

    Grace taxable income during the year = Gross income during the year - Deductible beginning loss during the year

    Grace taxable income during the year = $140,000 - $40,000

    Grace taxable income during the year = $100,000

    Therefore, her taxable income reduced from $140,000 to $100,000
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “Grace acquired an activity four years ago. The loss from the activity is $50,000 in the current year (at-risk basis of $40,000 as of the ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers
You Might be Interested in
Advertising is used mainly to A. influence consumer tastes. B. increase product awareness. C. promote company branding. D. track product popularity
Answers (1)
What does the term "elastic" describe? the way consumers make substitutions demand whose elasticity is exactly equal to 1 demand that is very sensitive to a change in price demand that is not very sensitive to a change in price
Answers (2)
On January 1, 2021, Sauder Corporation signed a five-year noncancelable lease for equipment. The terms of the lease called for Sauder to make annual payments of $200,000 at the beginning of each year for five years beginning on January 1, 2021 with
Answers (1)
Explain why a perfectly competitive firm does not expand its sales without limit if its horizontal demand curve indicates that it can sell as much as it desires at the current market price.
Answers (1)
Suppose the economy exhibits a large, unexpected increase in productivity growth that lasts for a decade.
Answers (1)
New Questions in Business
On July 1, 2020, Ayayai Corporation purchased Young Company by paying $257,800 cash and issuing a $139,000 note payable to Steve Young. At July 1, 2020, the balance sheet of Young Company was as follows.
Answers (1)
Wheeling Inc. uses the aging of accounts receivable method. Its estimate of uncollectible receivables resulting from the aging analysis equals $6,900.
Answers (1)
In Illinois Mobile homes are generally considered?
Answers (1)
In 2019, Grant's personal residence was completely destroyed by fire. He was insured for 100% of his actual loss, and he received the insurance settlement. Grant had adjusted gross income before considering the casualty item of $30,000.
Answers (1)
In the current year, Apricot Corporation had taxable income of $120,000. Included in taxable income was a $10,000 capital gain. The $120,000 of taxable income does not include a $15,000 capital loss carryforward available from the previous year.
Answers (1)
Home » Business » Grace acquired an activity four years ago. The loss from the activity is $50,000 in the current year (at-risk basis of $40,000 as of the beginning of the year). Without considering the loss from the activity, she has gross income of $140,000.
Sign Up Forgot Password?