[The following information applies to the questions displayed below.] 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 partnership. Both the partnership and the partners report on a calendar-year basis. At the start of the current yea Lance and Francesca had bases of $12,300 and $5,300, respectively, and the partnership did not have any liabil During the current year, the partnership reported the following results from operations: Net sales Cost of goods sold Operating expenses Short-term capital loss Tax-exempt interest 51231 gain On the last day of the year, the partnership distributed $5,300 each to Lance and Francesca. $ 715,000 538,000 200,000 7,000 7,000 11,000 prehensive Problem 15-81 Part 1 (Algo) That outside basis do Lance and Francesca have in their partnership interests at the end of the year? ow much of their losses are currently not deductible by Lance and Francesca because of the tax-basis limitation? o what extent does the passive activity loss limitation apply in restricting their deductible losses for the year?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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[The following information applies to the questions displayed below.]
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 $12,300 and $5,300, respectively, and the partnership did not have any liabilities.
During the current year, the partnership reported the following results from operations:
Net sales
Cost of goods sold
Operating expenses
Short-term capital loss
Tax-exempt interest
51231 gain
On the last day of the year, the partnership distributed $5,300 each to Lance and Francesca.
$ 715,000
538,000
200,000
7,000
7,000
11,000
Comprehensive Problem 15-81 Part 1 (Algo)
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?
(For all the requirements, negative amounts should be entered with a minus sign. Leave no answer blank. Enter zero if
applicable.)
a. Year end basis
b. Loss limited by tax basis
c. Loss limited by passive activity
Lance
Francesca
Transcribed Image Text:[The following information applies to the questions displayed below.] 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 $12,300 and $5,300, respectively, and the partnership did not have any liabilities. During the current year, the partnership reported the following results from operations: Net sales Cost of goods sold Operating expenses Short-term capital loss Tax-exempt interest 51231 gain On the last day of the year, the partnership distributed $5,300 each to Lance and Francesca. $ 715,000 538,000 200,000 7,000 7,000 11,000 Comprehensive Problem 15-81 Part 1 (Algo) 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? (For all the requirements, negative amounts should be entered with a minus sign. Leave no answer blank. Enter zero if applicable.) a. Year end basis b. Loss limited by tax basis c. Loss limited by passive activity Lance Francesca
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