Sue invested $6,500 in the ABC Limited Partnership and received a 10 percent interest in the partnership. The partnership had $23,000 ofqualified nonrecourse debt and $23,000 of debt Sue is not responsible to repay because she is a limited partner. Sue is allocated a 10percent share of both types of debt, resulting in a tax basis of $11,100 and an at-risk amount of $8,800. During the year, ABC LP generated a($111,000) loss. How much of Sue's loss is disallowed due to her tax basis or at-risk amount?Multiple Choice$0: all of her loss is allowed to be deducted.$2.300 disallowed because of her at-risk amount.$2,300 disallowed because of her tax basis.$4,600 disallowed because of her tax basis.

The objective of the question is to determine how much of Sue's loss is disallowed due to her tax…

Answered: Sue invested $6,500 in the ABC Limited…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Octavio starts the year with outside basis of $23,000 and an amount at-risk of $23,000 in his 40-percent general partnership interest in Brown Partnership. In the current year, the partnership distributes $5,000 to Octavio. His share of allocated ordinary income is $3,000. The partnership also takes on nonrecourse debt of $20,000 (none of which is qualified nonrecourse financing). Compute Octavio's ending outside basis and amount at-risk. Basis Amount at-risk
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