55.Danni is a single 30 percent owner of Kolt (a business entity).In the current...55.Danni...

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Accounting

55.
Danni is a single 30 percent owner of Kolt (a business entity).In the current year, Kolt reported a $1,000,000 business loss.Answer the following questions associated with each of thefollowing alternative scenarios:
a. Kolt is organized as a C corporation andDanni works 20 hours a week as an employee for Kolt. Danni has a$200,000 basis in her Kolt stock. How much of Kolt’s loss is Danniallowed to deduct this year against her other income?
b. Kolt is organized as an LLC taxed as apartnership. Thirty percent of Kolt’s loss is allocated to Danni.Danni works 20 hours a week on Kolt business activities (she is notconsidered to be a passive investor in Kolt). Danni has a $400,000basis in her Kolt ownership interest and she also has a $400,000at-risk amount in her investment in Kolt. Danni does not reportincome or loss from any other business activity investments. Howmuch of the $300,000 loss allocated to her from Kolt is Danniallowed to deduct this year?
c. Kolt is organized as an LLC taxed as apartnership. Thirty percent of Kolt’s loss is allocated to Danni.Danni is not involved in Kolt business activities. Consequently,she is considered to be a passive investor in Kolt. Danni has a$400,000 basis in her Kolt ownership interest and she also has a$400,000 at-risk amount in her investment in Kolt. Danni does notreport income or loss from any other business activity investments.How much of the $300,000 loss allocated to her from Kolt is Danniallowed to deduct this year?

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Answer a Kolt is organized as a C corporation and Danni works 20 hours a week as an employee for Kolt Neither income nor loss of a C corporation passes through the corporation to its shareholders C Corporation can carry forward net operating loss NOL When a business is organized as C Corporation any loss it suffers provides no benefit to its shareholders As such Danni is not allowed to See Answer

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In: Accounting55.Danni is a single 30 percent owner of Kolt (a business entity).In the current...55.Danni is a single 30 percent owner of Kolt (a business entity).In the current year, Kolt reported a $1,000,000 business loss.Answer the following questions associated with each of thefollowing alternative scenarios:a. Kolt is organized as a C corporation andDanni works 20 hours a week as an employee for Kolt. Danni has a$200,000 basis in her Kolt stock. How much of Kolt’s loss is Danniallowed to deduct this year against her other income?b. Kolt is organized as an LLC taxed as apartnership. Thirty percent of Kolt’s loss is allocated to Danni.Danni works 20 hours a week on Kolt business activities (she is notconsidered to be a passive investor in Kolt). Danni has a $400,000basis in her Kolt ownership interest and she also has a $400,000at-risk amount in her investment in Kolt. Danni does not reportincome or loss from any other business activity investments. Howmuch of the $300,000 loss allocated to her from Kolt is Danniallowed to deduct this year?c. Kolt is organized as an LLC taxed as apartnership. Thirty percent of Kolt’s loss is allocated to Danni.Danni is not involved in Kolt business activities. Consequently,she is considered to be a passive investor in Kolt. Danni has a$400,000 basis in her Kolt ownership interest and she also has a$400,000 at-risk amount in her investment in Kolt. Danni does notreport income or loss from any other business activity investments.How much of the $300,000 loss allocated to her from Kolt is Danniallowed to deduct this year?