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. Outside Basis: Amount at-risk:
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
Partnership is owned 25% each by A, his wife, his wife’s father and X Corporation, in which A is a 50% shareholder. What are the tax consequences to the parties involved in the following sales? (a) During the year the partnership sells A some land in which it has a basis of $50,000 for its fair market value of $40,000. In the succeeding year, A sells the land to B for $45,000. (b) Same as (a), above, except that the first sale is to a second partnership also owned by the same parties except that an unrelated party owns a 25% interest and X Corporation owns no interest in the second partnership. The second partnership then resells the land to B for $45,000. (c) A sells depreciable equipment in which he has an adjusted basis of $20,000 to the partnership for $30,000. (d) A’s wife sells residential rental property held by her as a capital asset to the partnership for $120,000. She had a $100,000 basis in the property. The partnership is in the housing rental business. (e) Same as (d),…
Kim received a 1/3 profits and capital interest in Bright Line, LLC in exchange for legal services she provided. In addition to her share of partnership profits or losses, she receives a $22,000 guaranteed payment each year for ongoing services she provides to the LLC. For X4, Bright Line reported the following revenues and expenses: Sales - $142,000, Cost of Goods Sold - $82,000, Depreciation Expense - $41,000, Long-Term Capital Gains - $7,000, Qualified Dividends - $5,200, and Municipal Bond Interest - $3,200. How much ordinary business income (loss) will Bright Line allocate to Kim on her Schedule K-1 for X4? Multiple Choice ($3,000). $10,600. $13,800. $19,000. None of the choices will be reported as ordinary business income (loss) on Schedule K-1.
A has been a partner in the ABC Partnership for only four months. During the current year, the partnership sold investment land that it purchased six years ago and recognized a $100,000 gain. A's distributive share of this gain is long-term capital gain. T or F
. At the end of last year, Catherine, a 30% partner in the KLM partnership, had an outside basis of $50,000 in her partnership interest. She sold her partnership interest for $90,000. The partnership had $100,000 of unrealized receivables, and no debt. Calculate the amount and character of Catherine’s recognized gain or loss.
MN.52. During the year, Janice invested $2,000 (tax basis and at-risk basis) into ABC limited partnership (a passive investment). Her share of the limited partnership income for the year was $6,000, and Janice received a $5,000 distribution from ABC limited partnership. During the year, Janice invested $5,500 (tax basis and at-risk basis) into DEF limited partnership (a passive investment). Her share of the limited partnership loss for the year was $6,500, and Janice received a $3,000 distribution from DEF limited partnership. What will be the net income/loss reported on Schedule 1 line 5 of a 2019 tax return? Will there be a carry forward?
Zoey contributed land with a tax basis of $45,000 and a fair market value of $100,000 in exchange for a 20% percent interest in the new formed ZAT Partnership. All other partners contributed cash and ZAT partnership has no liabilities. What is Zoey’s basis in her partnership interest in ZAT Partnership?

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