Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

1. Introduction to Accounting

Types of Accounting

Financial Accounting

1. Introduction to Accounting

Types of Accounting

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Multiple Choice

Which of the following lists the correct order of the loss-limitation rules applied to pass-through entities for tax purposes?

Tax basis limitation, passive activity loss limitation, at-risk limitation

At-risk limitation, tax basis limitation, passive activity loss limitation

Tax basis limitation, at-risk limitation, passive activity loss limitation

Passive activity loss limitation, at-risk limitation, tax basis limitation

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Verified step by step guidance

Understand the concept of pass-through entities: These are business structures where income, deductions, and credits pass directly to the owners or shareholders, avoiding corporate taxation. Examples include partnerships, S corporations, and LLCs.

Learn about the loss-limitation rules: These rules are designed to limit the amount of losses that can be deducted by owners of pass-through entities. The three main limitations are tax basis limitation, at-risk limitation, and passive activity loss limitation.

Tax basis limitation: This rule ensures that losses deducted cannot exceed the owner's investment in the entity. The tax basis includes contributions, income earned, and liabilities for which the owner is personally responsible.

At-risk limitation: This rule limits losses to the amount the owner has at risk in the business. It excludes nonrecourse loans (loans for which the owner is not personally liable) from the calculation.

Passive activity loss limitation: This rule restricts losses from passive activities (businesses in which the owner does not materially participate) to offset only passive income, not active or portfolio income. The correct order of application is: Tax basis limitation, at-risk limitation, passive activity loss limitation.