Nareh began the year with a tax basis of $29,000 in her partnership interest. Her share of partnership liabilities consists of $9,000 of recourse liabilities and $12,000 of nonrecourse liabilities at the beginning of the year and $9,000 of recourse liabilities and $17,000 of nonrecourse liabilities at the end of the year. During the year, she was allocated $45,000 of partnership ordinary business loss. Nareh does not materially participate in this partnership, and she has $5,000 of passive income from other sources. a. How much of Nareh's loss is limited by her tax basis? Loss limited by her tax basis 40,000 4
Nareh began the year with a tax basis of $29,000 in her partnership interest. Her share of partnership liabilities consists of $9,000 of recourse liabilities and $12,000 of nonrecourse liabilities at the beginning of the year and $9,000 of recourse liabilities and $17,000 of nonrecourse liabilities at the end of the year. During the year, she was allocated $45,000 of partnership ordinary business loss. Nareh does not materially participate in this partnership, and she has $5,000 of passive income from other sources. a. How much of Nareh's loss is limited by her tax basis? Loss limited by her tax basis 40,000 4
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Nareh began the year with a tax basis of $29,000 in her partnership interest. Her share
of partnership liabilities consists of $9,000 of recourse liabilities and $12,000 of
nonrecourse liabilities at the beginning of the year and $9,000 of recourse liabilities and
$17,000 of nonrecourse liabilities at the end of the year. During the year, she was
allocated $45,000 of partnership ordinary business loss. Nareh does not materially
participate in this partnership, and she has $5,000 of passive income from other
sources.
a. How much of Nareh's loss is limited by her tax basis?
Loss limited by her tax basis
40,000
4
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