a. The TimpRiders LP has operated a motorcycle dealership for a number of years. Lance is the limited partner, Francesca is the general partner, and they share capital and profits equally. Francesca works full time managing the partnership. Both the partnership and the partners report on a calendar-year basis. At the start of the current year, Lance and Francesca had bases of $10,000 and $3,000, respectively, and the partnership did not carry any debt. During the current year, the partnership reported the following results from operations: b. Net sales Cost of goods sold Operating expenses Short-term capital loss. Tax-exempt interest. §1231 gain a. What outside basis do Lance and Francesca have in their partnership interests at the end of the year? b. How much of their losses are currently not deductible by Lance and Francesca because of the tax-basis limitation? c. To what extent does the passive activity loss limitation apply in restricting their deductible losses for the year? C. (For all the requirements, negative amounts should be entered with a minus sign. Leave no answer blank. Enter zero if applicable.) Lance Francesca $650,000 $500,000 $160,000 $ 2,000 $ 2,000 $ 6,000 On the last day of the year, the partnership distributed $3,000 each to Lance and Francesca. Year end basis Loss limited by tax basis Loss limited by passive activity
a. The TimpRiders LP has operated a motorcycle dealership for a number of years. Lance is the limited partner, Francesca is the general partner, and they share capital and profits equally. Francesca works full time managing the partnership. Both the partnership and the partners report on a calendar-year basis. At the start of the current year, Lance and Francesca had bases of $10,000 and $3,000, respectively, and the partnership did not carry any debt. During the current year, the partnership reported the following results from operations: b. Net sales Cost of goods sold Operating expenses Short-term capital loss. Tax-exempt interest. §1231 gain a. What outside basis do Lance and Francesca have in their partnership interests at the end of the year? b. How much of their losses are currently not deductible by Lance and Francesca because of the tax-basis limitation? c. To what extent does the passive activity loss limitation apply in restricting their deductible losses for the year? C. (For all the requirements, negative amounts should be entered with a minus sign. Leave no answer blank. Enter zero if applicable.) Lance Francesca $650,000 $500,000 $160,000 $ 2,000 $ 2,000 $ 6,000 On the last day of the year, the partnership distributed $3,000 each to Lance and Francesca. Year end basis Loss limited by tax basis Loss limited by passive activity
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Chetan
Transcribed Image Text:a.
The TimpRiders LP has operated a motorcycle dealership for a number of years. Lance is the limited partner, Francesca is
the general partner, and they share capital and profits equally. Francesca works full time managing the partnership. Both
the partnership and the partners report on a calendar-year basis. At the start of the current year, Lance and Francesca had
bases of $10,000 and $3,000, respectively, and the partnership did not carry any debt. During the current year, the
partnership reported the following results from operations:
b.
Net sales
Cost of goods sold
Operating expenses
Short-term capital loss
Tax-exempt interest.
§1231 gain
a. What outside basis do Lance and Francesca have in their partnership interests at the end of the year?
b. How much of their losses are currently not deductible by Lance and Francesca because of the tax-basis limitation?
c. To what extent does the passive activity loss limitation apply in restricting their deductible losses for the year?
C.
(For all the requirements, negative amounts should be entered with a minus sign. Leave no answer blank. Enter zero if applicable.)
Lance
Francesca
$650,000
$500,000
$160,000
$ 2,000
$ 2,000
$
6,000
On the last day of the year, the partnership distributed $3,000 each to Lance and Francesca.
Year end basis
Loss limited by tax basis
Loss limited by passive activity
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