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 $11,700 and $4,300, 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 $ 690,000 516,000 188,000 3,400 Operating expenses Short-term capital loss Tax-exempt interest §1231 gain On the last day of the year, the partnership distributed $4,300 each to Amir and Francesca. 3,300 7,300 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?

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 $11,700 and $4,300, 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 $ 690,000 516,000 188,000 3,400 Operating expenses Short-term capital loss Tax-exempt interest §1231 gain On the last day of the year, the partnership distributed $4,300 each to Amir and Francesca. 3,300 7,300 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?

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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