89. in the current year, crow corporation, a closely held c corporation that is not a personal service corporation, has $100,000 of passive activity losses, $80,000 of active business income, and $20,000 of portfolio income. how much of the passive activity loss may crow deduct in the current year?

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21-12-2022
Business

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89. in the current year, crow corporation, a closely held c corporation that is not a personal service corporation, has $100,000 of passive activity losses, $80,000 of active business income, and $20,000 of portfolio income. how much of the passive activity loss may crow deduct in the current year?

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Tom056 Tom056 · Answer 1 · 2022-12-24T06:04:35-05:00

Crow may deduct $80,000 in the current year.

A deduction is the sum that lowers the taxpayer's taxable income and hence lowers their tax obligation. Before claiming these deductions, the taxpayer must meet certain qualifying requirements. Up to the amount of active business income in the current year, passive loss may be written off.

Losses from passive activities that are greater than passive activity income are often disallowed for the current year. Passive losses that aren't allowed can be carried over to the following tax year.

You simply have to pay taxes on the net gains from passive activities, like all other types of investment income. It follows that you can utilize passive losses to balance passive gains, paying taxes solely on the difference in the end.

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