At the beginning of Year 1 Ms. Mushroom, an individual, purchased a 20 percent interest in Fungi Partnership for $22,000 Mushroom's Schedule K-1 reported that her share of Fungi's debt at year-end was $21,000, and her share of ordinary loss $38,600. On January 1, Year 2, Ms. Mushroom sold her interest to another partner for $2,900 cash. Required: a. How much of her share of Fungi's loss can Ms. Mushroom deduct on her Year 1 tax return? b. Compute Ms. Mushroom's recognized gain on sale of her Fungi Partnership interest. c. How would your answers to parts a and b change if Fungi were an S corporation instead of a partnership?

At the beginning of Year 1 Ms. Mushroom, an individual, purchased a 20 percent interest in Fungi Partnership for $22,000 Mushroom's Schedule K-1 reported that her share of Fungi's debt at year-end was $21,000, and her share of ordinary loss $38,600. On January 1, Year 2, Ms. Mushroom sold her interest to another partner for $2,900 cash. Required: a. How much of her share of Fungi's loss can Ms. Mushroom deduct on her Year 1 tax return? b. Compute Ms. Mushroom's recognized gain on sale of her Fungi Partnership interest. c. How would your answers to parts a and b change if Fungi were an S corporation instead of a partnership?

SWFT Comprehensive Volume 2019

42nd Edition

ISBN:9780357233306

Author:Maloney

Publisher:Maloney

Chapter21: Partnerships

Section: Chapter Questions

Problem 7BCRQ

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