The TimpRiders LP has operated a motorcycle dealership for a number of years. Amir is the limited partner, Francesca the general partner, and they share capital and profits equally. Francesca works full time managing the partnership. Bo the partnership and the partners report on a calendar-year basis. At the start of the current year, Amir and Francesca h bases of $11,900 and $4,100, respectively, and the partnership did not have any liabilities. During the current year, the partnership reported the following results from operations:
The TimpRiders LP has operated a motorcycle dealership for a number of years. Amir is the limited partner, Francesca the general partner, and they share capital and profits equally. Francesca works full time managing the partnership. Bo the partnership and the partners report on a calendar-year basis. At the start of the current year, Amir and Francesca h bases of $11,900 and $4,100, respectively, and the partnership did not have any liabilities. During the current year, the partnership reported the following results from operations:
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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. Amir is the limited partner, Francesca is
the general partner, and they share capital and profits equally. Francesca works full time managing the partnership. Bot
the partnership and the partners report on a calendar-year basis. At the start of the current year, Amir and Francesca ha
bases of $11,900 and $4,100, 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
$ 684,000
511,000
186,000
2,800
3,100
7,100
On the last day of the year, the partnership distributed $4,100 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?
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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. Amir is the limited partner, Francesca is
the general partner, and they share capital and profits equally. Francesca works full time managing the partnership. Bot
the partnership and the partners report on a calendar-year basis. At the start of the current year, Amir and Francesca ha
bases of $11,900 and $4,100, 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
$ 684,000
511,000
186,000
2,800
3,100
7,100
On the last day of the year, the partnership distributed $4,100 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 renuiremente noastive amounte chauld he entered with a minue einn leave no aneware blank Enter v
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Step 1: Define 'Partnership':
VIEWStep 2: (a) Determine the outside basis do Amir and Francesca have at the end of the year:
VIEWStep 3: (b) Determine the losses that are currently not deductible because of the tax-basis limitation:
VIEWStep 4: (c) Determine the extent of passive activity loss limitation in restricting their deductible losses:
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