233k views
4 votes
Sue invested $5,000 in the ABC Limited Partnership and received a 10 percent interest in the partnership. The partnership had $20,000 of qualified nonrecourse debt and $20,000 of debt Sue is not responsible to repay because she is a limited partner. Sue is allocated a 10 percent share of both types of debt, resulting in a tax basis of $9,000 and an at-risk amount of $7,000. During the year, ABC LP generated a ($90,000) loss. How much of Sue's loss is disallowed due to her tax basis or at-risk amount?

User Augustus
by
8.0k points

1 Answer

4 votes

Answer:

The $2,000 Sue's loss is disallowed due to her tax basis or at-risk amount

Step-by-step explanation:

Since we have to compute the disallowed sue's loss based on tax or at-risk amount, so we use these amounts only in the computation part.

The computation is shown below:

= Tax basis - At-risk amount

= $9,000 - $7,000

= $2,000

Hence, the other cost like invested amount, qualified noncourse debt, loss amount are not considered. So, it is ignored

User Vishal Akkalkote
by
8.1k points
Welcome to QAmmunity.org, where you can ask questions and receive answers from other members of our community.

9.4m questions

12.2m answers

Categories