Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. sal is a 50% owner in a seafood restaurant. he has

Sal is a 50% owner in a seafood restaurant. He has been a material participant...

90.2K

Verified Solution

Question

Accounting

Sal is a 50% owner in a seafood restaurant. He has been a material participant in the activity for the previous 25 years. Although he retired from the restaurant at the end of last year and will not participate in the activity in the future, he still owns the 50% interest. Sal is a material participant in a clothing store where he is a 50% partner. Sal treats the restaurant and clothing store as separate activities. The restaurant incurred a loss for the current year. Sal's share of the loss is $50,000. The clothing store business generated income during the year. Sal's share of the income from the clothing store business is $100,000. He does not own interests in any other activities, (Ignore any at-risk limitations). Which of the following is correct?

a. Sal cannot deduct the $50,000 loss from the restaurant in the current yearbecause he is no longer a material participant.

b. Sal cannot deduct any losses from the restaurant until he either sells or disposes of the activity or becomes a material participant in the future.

c. Sal can only deduct losses from the restaurant when he has income from the restaurant in future years.

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Zin AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Q

MATLAB According to Moore’s Law ( an observation made in 1965 by Gordon Moore, a cofounder of...

Mechanical Engineering
Q

what is 5s + 1s and how can apply in process

Electrical Engineering
Q

Sketch the following regions:                                                                     | z + 3e?i/4| = 3                          2. { ez | Im z = 1}

Advance Math
Q

5 points Save The textbook discusses brain imaging studies in which people with ASPD and...

Biology
Q

How should contingent liabilities that are reasonably possible be reported in the financial statements? They...

Accounting
Q

Which of the following items is typically not impacted by taxes when considering Net Present...

Accounting
Q

Sunland Railroad Co. is about to issue $298,000 of 10-year bonds paying an 12% interest...

Accounting
Q

Pablo Company is considering buying a machine that will yield income of $3,200 and net...

Accounting
Q

2. Prepare a depreciation schedule for four years using the double-declining-balance method. (Hint: The asset...

Accounting
Q

Whispering Company adopted the dollar-value LIFO method on January 1, 2020 (using internal price indexes...

Accounting
Q

If you invest $100,000 in TESLA what is the one day 1% VaR? The 1-day...

Finance
Q

Como tenedor de libros de tiempo completo, su trabajo es hacer correcciones a las cuentas...

Accounting