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 $11,100 and $3,900, respectively, and the partnership did not have any liabilities. During the current year, the partnership reported the following results from operations: Net sales$ 678,000Cost of goods sold512,000Operating expenses180,000Short-term capital loss4,200Tax-exempt interest2,900§1231 gain6,900 On the last day of the year, the partnership distributed $3,900 each to Lance and Francesca. Comprehensive Problem 09-81 Part 1 (Algo) What outside basis do Lance and Francesca have in their partnership interests at the end of the year? How much of their losses are currently not deductible by Lance and Francesca because of the tax-basis limitation? To what extent does the passive activity loss limitation apply in restricting their deductible losses for the year?

SWFT Comprehensive Vol 2020
43rd Edition
ISBN:9780357391723
Author:Maloney
Publisher:Maloney
Chapter21: Partnerships
Section: Chapter Questions
Problem 2BCRQ
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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 $11,100 and $3,900, respectively, and the partnership did not have any liabilities. During the current year, the partnership reported the following results from operations: Net sales$ 678,000Cost of goods sold512,000Operating expenses180,000Short-term capital loss4,200Tax-exempt interest2,900§1231 gain6,900 On the last day of the year, the partnership distributed $3,900 each to Lance and Francesca. Comprehensive Problem 09-81 Part 1 (Algo) What outside basis do Lance and Francesca have in their partnership interests at the end of the year? How much of their losses are currently not deductible by Lance and Francesca because of the tax-basis limitation? To what extent does the passive activity loss limitation apply in restricting their deductible losses for the year?
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