Calculate the initial basis, allowed losses, and ending at-risk amounts.Explain how to treat a loss on a federal income tax return

 

Complete the partnership interest problem that requires you to apply research and knowledge of the rules and laws associated with at-risk or passive activity losses, as well as the individual alternative minimum tax (AMT).

Note: The assessments in this course are presented in a sequence and must be completed in order. Do not complete Assessment 6 until you have submitted and received faculty feedback for Assessment 5.

Introduction

Tax regulations are in a state of constant change. Being able to locate and correctly interpret and apply the information to a problem is a highly valued skill.

Note: The assessments in this course are presented in a sequence and must be completed in order. Do not complete Assessment 6 until you have submitted and received faculty feedback for Assessment 5.

Preparation

Tax regulations are in a state of constant change. Being able to locate, correctly interpret, and apply the information to a problem is a highly valued skill. Consider each problem and research the applicable tax regulations to answer the questions.

Instructions

For this assessment, complete the following:

  • Download Assessment 6 Problems [DOCX].
  • Using the primary source of IRS.gov and the IRS Interactive Tax Assistant and Tax Trails, locate and interpret regulations and publications that relate to each problem.
  • Record your answers to the problems in a Word document.
  • Provide an explanation for each answer, including any related calculations and evidence.
  • Include the following criteria from the scoring guide in your responses.
    • Calculate the initial basis, allowed losses, and ending at-risk amounts.
    • Explain how to treat a loss on a federal income tax return.
    • Calculate what can be deducted on a final income tax return.
    • Calculate the loss disallowed by at-risk rules and how much of the loss is disallowed by passive loss rules.
    • Explain the tax effect in a specified scenario for the last year and the current year.
    • Calculate itemized deductions for AMT purposes and identify the amount of the AMT adjustment.
  • Submit the Word document containing your answers to the problems and the explanations for your answers.

Competencies Measured

By successfully completing this assessment, you will demonstrate your proficiency in the following course competencies and assessment criteria:

  • Competency 1: Analyze the background of the federal income tax system.
    • Explain the tax effect in a specified scenario for the last year and the current year.
  • Competency 2: Analyze the basics of individual income tax return preparation.
    • Calculate the initial basis, allowed losses, and ending at-risk amounts.
    • Explain how to treat a loss on a federal income tax return.
    • Calculate what can be deducted on a final income tax return.
    • Calculate the loss disallowed by at-risk rules and how much of the loss is disallowed by the passive loss rules.
    • Calculate itemized deductions for AMT purposes and identify the amount of the AMT adjustment.

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