The TimpRiders LP has operated a motorcycle dealership for a number of years. Amir 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, Amir and Francesca had basis of $12,000 and $5,000, 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-tern capital loss Tax-exempt interest $1231 gain $ 711,000 530,000 197,000 4,000 4,000 8,000 On the last day of the year, the partnership distributed $5,000 each to Amir and Francesca. Comprehensive Problem 20-81 Part 1 (Algo) Required: a. What outside basis do Amir and Francesca have in their partnership interests at the end of the year? b. How much of their losses are currently not deductible by Amir 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? Note: For all the requirements, negative amounts should be entered with a minus sign. Leave no answers blank. Enter zero if applicable. Answer is complete but not entirely correct. a. Year-end basis b. Loss limited by tax basis c Loss limited by passive activity Amir 3,000 Francesca $ (4,000) $ 3,000 0
The TimpRiders LP has operated a motorcycle dealership for a number of years. Amir 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, Amir and Francesca had basis of $12,000 and $5,000, 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-tern capital loss Tax-exempt interest $1231 gain $ 711,000 530,000 197,000 4,000 4,000 8,000 On the last day of the year, the partnership distributed $5,000 each to Amir and Francesca. Comprehensive Problem 20-81 Part 1 (Algo) Required: a. What outside basis do Amir and Francesca have in their partnership interests at the end of the year? b. How much of their losses are currently not deductible by Amir 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? Note: For all the requirements, negative amounts should be entered with a minus sign. Leave no answers blank. Enter zero if applicable. Answer is complete but not entirely correct. a. Year-end basis b. Loss limited by tax basis c Loss limited by passive activity Amir 3,000 Francesca $ (4,000) $ 3,000 0
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:The TimpRiders LP has operated a motorcycle dealership for a number of years. Amir 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, Amir and Francesca had
basis of $12,000 and $5,000, 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
$1231 gain
$ 711,000
530,000
197,000
4,000
4,000
8,000
On the last day of the year, the partnership distributed $5,000 each to Amir and Francesca.
Comprehensive Problem 20-81 Part 1 (Algo)
Required:
a. What outside basis do Amir and Francesca have in their partnership interests at the end of the year?
b. How much of their losses are currently not deductible by Amir 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?
Note: For all the requirements, negative amounts should be entered with a minus sign. Leave no answers blank. Enter zero if
applicable.
Answer is complete but not entirely correct.
a. Year-end basis
b. Loss limited by tax basis
c Loss limited by passive activity
Amir
3,000
Francesca
$
(4,000)
$ 3,000
0
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