Sullivan, a pilot for northern airlines, has adjusted gross income of $92,000 before considering the following losses. the passive activity rules disallow the deduction for a loss in which of the following?
i.

sullivan has a $4,500 loss from his ownership interest in cowco, a feeder-cattle limited partnership. sullivan is a general partner and is responsible for day-to-day management decisions.

ii.

sullivan has a $7,000 loss from his ownership interest in swineco, a feeder-pig limited partnership. sullivan is a limited partner.



a.

only statement i is correct.

b.

only statement ii is correct.

c.

both statements are correct.

d.

neither statement is correct.

You are working on a bid to build two city parks a year for the next three years. this project requires the purchase of $249,000 of equipment that will be depreciated using straight-line depreciation to a zero book value over the three-year project life. ignore bonus depreciation. the equipment can be sold at the end of the project for $115,000. you will also need $18.000 in net working capital for the duration of the project. the fixed costs will be $37000 a year and the variable costs will be $148,000 per park. your required rate of return is 14 percent and your tax rate is 21 percent. what is the minimal amount you should bid per park? (round your answer to the nearest $100) (a) $214,300 (b) $214,100 (c) $212,500 (d) $208,200 (e) $208,400