! 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
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
![!
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
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step 1: Partnership introduction
VIEWStep 2: Dermination of outside basis Amir and Francesca have in their partnership interests:
VIEWStep 3: Determination of the losses are currently not deductible by Amir and Francesca:
VIEWStep 4: Determination of the passive activity loss limitation apply in restricting their deductible losses:
VIEWSolution
VIEW
Step by step
Solved in 5 steps
Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education