1. Assessment Results:
https://www.mindtools.com/pages/article/leadership-style-
quiz.htm
Scored 24 points
You lean toward a democratic or participative style of
leadership. You tend to set the parameters for the work and
have the final say on decisions, but you actively involve your
team members in the process. This style can build trust between
you and your people, as they'll likely feel engaged and valued.
But it's not great in a high-pressure situation that requires a fast
turnaround, as it will slow you down. And, if you dislike
disagreement or conflict, you might struggle with how people
respond to consultation.
Democratic, Participative Leadership
With this approach, you set goals, guide team discussions, and
make the final decision. But you also acknowledge that your
people can have valuable insight into a problem or process, so
you actively consult them . As a result, you'll likely gain
creative input and fresh ideas that you wouldn't have come up
with if you were working alone. You might wonder how to
manage differing opinions in the team, once you've invited
participation in this way. Your goal is to build a culture in
which people can have healthy debates with one another. So:
Set an example by being open and flexible yourself. Make
managing mutual acceptance a priority, to ensure everyone's
participation. Learn some Conflict Resolution skills. Read our
article on Managing Emotion in Your Team .Be aware that
processes could become dangerously slow if you involve your
team members in every decision. You'll need to judge carefully
whether you need to adopt a more autocratic approach, even if
it's only briefly.
1) What hurdles (or limitations) must partners overcome before
they can ultimately deduct partnership losses on their tax
2. returns?
Partners must overcome the four loss limitations are (1) the tax
basis limitation, (2) the at-risk loss limitation, (3) the passive
activity loss limitation, and (4) the excess business loss
limitation. While a partnership can create an ordinary business
loss, the individual partners potentially will not be able to
deduct the entire amount in the year of the loss. The partner
must potentially overcome four loss limitation rules before the
deduction is available. If the loss does not pass any of the
limitations, then the loss is suspended indefinitely under that
specific hurdle.
How do partners determine whether they are passive
participants in partnerships when applying the passive loss
limitation rules
partners are passive participants if their involvement not
‘regular, continuous and substantial.’ Here are the 7 tests to
determine material participation:
The individual participates in the activity more than 500 hours
during the year.
The individual's activity constitutes substantially all the
participation in such activity by individuals.
The individual participates more than 100 hours during the year
and the individual's participation is not less than any other
individual's participation in the activity.
The activity qualifies as a "significant participation activity"
and the aggregate of all other "significant participation
activities" is greater than 500 hours for the year.
The individual materially participated in the activity for any 5
of the proceeding 10 taxable years.
The activity involves personal services in health, law,
accounting, architecture, and so on, and the individual
materially participated for any three preceding years.
Taking into account all the facts and circumstances, the
individual participants on a regular, continuous, and substantial
basis during the year.
3. 2) Partners must overcome 4 loss limitation rules before they
can ultimately deduct partnership losses on their tax returns.
The 4 hurdles are (1) tax basis (2) at-risk amount (3) passive
activity loss limitation (4) excess business loss limitation. The
tax basis limitation is the amount a partner has invested in a
partnership to satisfy their debt obligations (Spilker, 2020).
Losses in excess of their tax basis must be carried forward. The
at-risk limitation is more restrictive as it is meant to limit the
partner’s usage of nonrecourse debt to create a tax basis.
Passive activity loss limitation is created as a backstop for the
at-risk limitations. They are applied after-tax basis and at-risk
hurdles (Spilker, 2020). While it is mainly applied to
individuals, it is also used on estates, trusts, some c
corporations, and personal service corporations. Lastly, the
excess business loss limitation is applied after the first 3
limitations to losses that aren't passive. The purpose of this
limitation is that business losses from partnerships are limited
to business income from other sources plus a threshold amount
(Spilker, 2020). All 4 of these hurdles should be overcome or
checked before completely deducting partnership losses.
A passive activity is defined as “activity that involves the
conduct of a trade or business and in which the taxpayer does
not “materially participate” (Spilker, 2020). In order to
determine material participation, there are seven tests. (1) the
individual participates in the activity for more than 500 hours
each year, (2) the individual's activity constitutes substantially
all the participation, (3) the individual participates more than
100 hours during the year and is not less than anyone else's
participation, (4) the activity qualifies as a significant
participation activity which means the individual participates
for more than 100 hours during the year, (5) you materially
participated in the activity for any 5 of the preceding 10 taxable
years, (6) the activity involves personal services and materially
4. participated for any of 3 preceding years, (7) the individual
participates on a regular, substantial basis during the tax year
(Spilker, 2020).
