! Required information [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. Both the partnership and the partners report on a calendar-year basis. At the start of the current year, Amir and Francesca had bases of $10,700 and $3,300, 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 Operating expenses $660,000 503,000 167,000 Short-term capital loss 1,400 2,300 6,300 Tax-exempt interest §1231 gain On the last day of the year, the partnership distributed $3,300 each to Amir and Francesca. 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. Amir Francesca a. Year-end basis $ 0 b. Loss limited by tax basis $ 0$ (1,400) c. Loss limited by passive activity $ 0
! Required information [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. Both the partnership and the partners report on a calendar-year basis. At the start of the current year, Amir and Francesca had bases of $10,700 and $3,300, 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 Operating expenses $660,000 503,000 167,000 Short-term capital loss 1,400 2,300 6,300 Tax-exempt interest §1231 gain On the last day of the year, the partnership distributed $3,300 each to Amir and Francesca. 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. Amir Francesca a. Year-end basis $ 0 b. Loss limited by tax basis $ 0$ (1,400) c. Loss limited by passive activity $ 0
Chapter4: Gross Income: Concepts And Inclusions
Section: Chapter Questions
Problem 43P
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![!
Required information
[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. Both
the partnership and the partners report on a calendar-year basis. At the start of the current year, Amir and Francesca had
bases of $10,700 and $3,300, 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
Operating expenses
Short-term capital loss
Tax-exempt interest
$1231 gain
$ 660,000
503,000
167,000
1,400
2,300
6,300
On the last day of the year, the partnership distributed $3,300 each to Amir and Francesca.
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.
Amir
Francesca
a. Year-end basis
b. Loss limited by tax basis
$
0
$
0
$
(1,400)
c. Loss limited by passive activity
$
0](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F63da6b4e-3a75-4ed5-a8aa-0a0252230651%2F15bedba4-86dc-4d7c-849f-502f321e0a4b%2Fscavwa7_processed.png&w=3840&q=75)
Transcribed Image Text:!
Required information
[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. Both
the partnership and the partners report on a calendar-year basis. At the start of the current year, Amir and Francesca had
bases of $10,700 and $3,300, 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
Operating expenses
Short-term capital loss
Tax-exempt interest
$1231 gain
$ 660,000
503,000
167,000
1,400
2,300
6,300
On the last day of the year, the partnership distributed $3,300 each to Amir and Francesca.
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.
Amir
Francesca
a. Year-end basis
b. Loss limited by tax basis
$
0
$
0
$
(1,400)
c. Loss limited by passive activity
$
0
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VIEWStep 4: Determination of the passive activity loss limitation apply in restricting their deductible losses:
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