The following information applies to the questions displayed The TimpRiders LP has operated a motorcycle dealership for ne general partner, and they share capital and profits equall ne partnership and the partners report on a calendar-year b ases of $12,400 and $5,400, respectively, and the partners artnership reported the following results from operations:
The following information applies to the questions displayed The TimpRiders LP has operated a motorcycle dealership for ne general partner, and they share capital and profits equall ne partnership and the partners report on a calendar-year b ases of $12,400 and $5,400, respectively, and the partners artnership reported the following results from operations:
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Qd 221.
![Required information
[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 $12,400 and $5,400, 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.
$ 716,000
540,000
201,000
8,000
8,000
12,000
Operating expenses
Short-term capital loss
Tax-exempt interest.
$1231 gain
On the last day of the year, the partnership distributed $5,400 each to Lance and Francesca.
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.)
Lance
Francesca
a. Year end basis
b. Loss limited by tax basis
c. Loss limited by passive activity
0
$
$
0
0
S
…..
Maud](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fa83d1045-6281-45cc-ad9c-9377e3fa698e%2Ff6664671-ff86-4f52-a545-202935b5ea38%2Fha5byy9_processed.png&w=3840&q=75)
Transcribed Image Text:Required information
[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 $12,400 and $5,400, 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.
$ 716,000
540,000
201,000
8,000
8,000
12,000
Operating expenses
Short-term capital loss
Tax-exempt interest.
$1231 gain
On the last day of the year, the partnership distributed $5,400 each to Lance and Francesca.
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.)
Lance
Francesca
a. Year end basis
b. Loss limited by tax basis
c. Loss limited by passive activity
0
$
$
0
0
S
…..
Maud
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