Question

Lucy sells her partnership interest, a passive activity, with an adjusted basis of $305,000 for $330,000. In addition, she has current and suspended losses of $28,000 associated with the partnership and has no other passive activities. a. Calculate Lucy's total gain and her current deductible loss. Her total gain is $fill in the blank 1 and her deductible loss is $fill in the blank 2 . b. What type of income can the deductible loss offset

Answer 1

A. $25,000 gain

B. ($3,000)

Step-by-step explanation:

A. Calculation to determine Lucy's total gain

Amount realized $330,000

Less Adjusted basis ($305,000)

Total gain $25,000

($330,000-$305,000)

Therefore Lucy's total gain is $25,000

B. Calculation to determine her current deductible loss.

Amount realized $330,000

Less Adjusted basis ($305,000)

Total gain $ 25,000

($330,000-$305,000)

Less Suspended losses ($28,000)

Not passive Deductible loss ($3,000)

($25,000-$28,000)

Therefore her current deductible loss is ($3,000)