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, 300 and $5,300, respectively, and the partnership did not have any liabilities. During the current year, the partnership reported the following results from operations: Net sales $ 715,000 Cost of goods sold 535,000 Operating expenses 200,000 Short-term capital loss 4,500 Tax-exempt interest 7,000 §1231 gain 11,000 On the last day of the year, the partnership distributed $5,300 each to Amir and Francesca. Required: What outside basis do Amir and Francesca have in their partnership interests at the end of the year? How much of their losses are currently not deductible by Amir 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?\table[[,Amir, Francesca], [a. Year-end basis,,], [b. Loss limited by tax basis,,], [c. Loss limited by passive activity,,]] a. Year-end basis b. Loss limited by tax basis c. Loss limited by passive activity 0 Amir Francesca
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, 300 and $5,300, respectively, and the partnership did not have any liabilities. During the current year, the partnership reported the following results from operations: Net sales $ 715,000 Cost of goods sold 535,000 Operating expenses 200,000 Short-term capital loss 4,500 Tax-exempt interest 7,000 §1231 gain 11,000 On the last day of the year, the partnership distributed $5,300 each to Amir and Francesca. Required: What outside basis do Amir and Francesca have in their partnership interests at the end of the year? How much of their losses are currently not deductible by Amir 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?\table[[,Amir, Francesca], [a. Year-end basis,,], [b. Loss limited by tax basis,,], [c. Loss limited by passive activity,,]] a. Year-end basis b. Loss limited by tax basis c. Loss limited by passive activity 0 Amir Francesca
Chapter21: Partnerships
Section: Chapter Questions
Problem 2BCRQ
Related questions
Question
![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, 300 and $5,300, respectively, and the partnership did not have any liabilities. During the current year,
the partnership reported the following results from operations: Net sales $ 715,000 Cost of goods sold 535,000
Operating expenses 200,000 Short-term capital loss 4,500 Tax-exempt interest 7,000 §1231 gain 11,000 On the last
day of the year, the partnership distributed $5,300 each to Amir and Francesca. Required: What outside basis do Amir
and Francesca have in their partnership interests at the end of the year? How much of their losses are currently not
deductible by Amir 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?\table[[,Amir, Francesca], [a. Year-end basis,,], [b. Loss
limited by tax basis,,], [c. Loss limited by passive activity,,]]
a. Year-end basis
b. Loss limited by tax basis
c. Loss limited by passive activity
0
Amir
Francesca](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F531a964b-7464-43cc-a775-f5e415c0eaa2%2F27cd2b22-074c-4297-84fd-f28556bb572e%2Fa0scgm_processed.jpeg&w=3840&q=75)
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, 300 and $5,300, respectively, and the partnership did not have any liabilities. During the current year,
the partnership reported the following results from operations: Net sales $ 715,000 Cost of goods sold 535,000
Operating expenses 200,000 Short-term capital loss 4,500 Tax-exempt interest 7,000 §1231 gain 11,000 On the last
day of the year, the partnership distributed $5,300 each to Amir and Francesca. Required: What outside basis do Amir
and Francesca have in their partnership interests at the end of the year? How much of their losses are currently not
deductible by Amir 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?\table[[,Amir, Francesca], [a. Year-end basis,,], [b. Loss
limited by tax basis,,], [c. Loss limited by passive activity,,]]
a. Year-end basis
b. Loss limited by tax basis
c. Loss limited by passive activity
0
Amir
Francesca
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