Ling owns 3 passive investments.During the last two years,she has the following income and loss from each activity:
$\begin{array}{lrr}
&2012 & 2013 \
\text { Activity 1 } &\$(14,000) & \$(6,000) \
\text { Activity 2 } &(6,000) & (1,000) \
\text { Activity 3 } &8,000 & 12,000
\end{array}$
At the end of 2013 what is the amount of suspended loss allocated to Activity 2?

Question

Ling owns 3 passive investments.During the last two years,she has the following income and loss from each activity:
$\begin{array}{lrr}
&2012 & 2013 \
 \text { Activity 1 } &\$(14,000) & \$(6,000) \
 \text { Activity  2 } &(6,000) & (1,000) \
 \text { Activity  3 } &8,000 & 12,000
\end{array}$
At the end of 2013 what is the amount of suspended loss allocated to Activity 2?

Quizplus · Accepted Answer

The suspended loss is the total loss from the passive activity that exceeds the passive income from all passive activities. In this case, the total loss from the passive activities is $20,000 ($14,000 + $6,000). The passive income from all passive activities is $20,000 ($8,000 + $12,000). Therefore, the suspended loss is $0. The suspended loss is allocated to the passive activities in proportion to their losses. In this case, Activity 2 has a loss of $7,000, which is 35% of the total loss. Therefore, Activity 2 is allocated 35% of the suspended loss, which is $1,695.

Ling Owns 3 Passive Investments At the End of 2013 What Is the Amount of the Following