Wes's at-risk amount in a passive activity is $25,000 at the beginning of the current year.His current loss from the activity is $35,000 and he has no passive activity income.At the end of the current year, which of the following statements is incorrect?
A)Wes has a loss of $25,000 suspended under the passive activity loss rules.
B)Wes has an at-risk amount in the activity of $0.
C)Wes has a loss of $10,000 suspended under the at-risk rules.
D)Wes has a loss of $35,000 suspended under the passive activity loss rules.
E)None of these is incorrect.

Question

Quizplus · Accepted Answer

Wes's at-risk amount of $25,000 is less than his current loss of $35,000, resulting in a suspended loss of $10,000 under the at-risk rules. Because he has no passive activity income, the entire $35,000 loss is suspended under the passive activity loss rules. Therefore, statement D is incorrect as it incorrectly identifies the amount of loss suspended under the rules.

Wes's At-Risk Amount in a Passive Activity Is $25,000 at the Beginning