Virginia Day owns a 5 percent limited partnership interest in Zulu Limited Partners. In Year 4 the partnership incurred a substantial loss. On January 1, Year 5, Virginia sold the partnership interest to an unrelated party for $4,000 cash. Virginia's share of partnership debts were transferred to the buyer. Virginia's only other sources of income in Years 4 and 5 are a salary of $100,000 and rental real estate income of $10,000. Using the information about Virginia's limited partnership interest, complete the table below. Determine the amount of partnership loss that can be deducted in Year 4 and the amounts suspended in Year 4 due to tax basis, at-risk basis, and passive activity loss limitations. Calculate Virginia's gain or loss from the sale of her partnership interest and the amount of each suspended loss that she can deduct in Year 5. Enter the amounts in the table below using positive values. If the amount is zero, enter a zero (0). Year 4: Year 4 loss suspended due to tax basis limitation Year 4 loss suspended due to at risk basis limitation Year 4 loss suspended due to passive activity loss limitation Year 4 limited partnership ordinary loss deduction allowed
Virginia Day owns a 5 percent limited partnership interest in Zulu Limited Partners. In Year 4 the partnership incurred a substantial loss. On January 1, Year 5, Virginia sold the partnership interest to an unrelated party for $4,000 cash. Virginia's share of partnership debts were transferred to the buyer. Virginia's only other sources of income in Years 4 and 5 are a salary of $100,000 and rental real estate income of $10,000.
Using the information about Virginia's limited partnership interest, complete the table below. Determine the amount of partnership loss that can be deducted in Year 4 and the amounts suspended in Year 4 due to tax basis, at-risk basis, and passive activity loss limitations. Calculate Virginia's gain or loss from the sale of her partnership interest and the amount of each suspended loss that she can deduct in Year 5. Enter the amounts in the table below using positive values. If the amount is zero, enter a zero (0).
Year 4:
Year 4 loss suspended due to tax basis limitation
Year 4 loss suspended due to at risk basis limitation
Year 4 loss suspended due to passive activity loss limitation
Year 4 limited partnership ordinary loss deduction allowed
Year 5:
Year 5 gain or loss from sale of the limited partnership interest
Year 5 deduction of suspended loss due to tax basis
Year 5 deduction of suspended loss due to at-risk basis
Year 5 deduction of suspended passive activity loss
| Year 4 beginning tax basis in partnership interest | $35,000 |
| Less: share of partnership nonrecourse secured loan from related party | ($2,000) |
| Year 4 beginning at-risk basis in partnership interest | $33,000 |
| Share of partnership liabilities (included in tax basis of partnership interest): | |
| Share of partnership qualified nonrecourse secured real estate mortgage | $3,000 |
| Share of partnership nonrecourse secured loan from related party | $2,000 |
| $5,000 | |
| Year 4 share of partnership ordinary business loss | $50,000 |
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