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Maxen is a member of Stubbs LLC. On January 1, year 1, Maxen has a $75,000 tax basis in his LLC interest that includes his $40,000 share of Stubbs's general debt obligations. His share of the Stubbs losses for year 1 is $100,000. By the end of the year, Maxen's share of Stubbs's general debt obligations has decreased to $25,000, and he is NOT at risk for any of it. Maxen does not materially participate in Stubbs. Maxen also invests in an S corporation, and has year 1, Schedule K-1 passive income from the corporation of $7,000.

1) How much of the Stubbs LLC loss will Maxen currently be able to deduct on his tax return for year 1?
2) How much loss is suspended due to the tax basis limitation?
3) How much loss is suspended due to the at-risk basis limitation?
4) How much loss is suspended due to the passive activity loss limitation?

 

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