Question

Required information The following information applies to the questions displayed below.) Jenna began the year with a tax basis of $40,000 in her partnership interest. Her share of partnership debt consists of $7,000 of recourse debt and $8,000 of nonrecourse debt at the beginning of the year and $7,000 of recourse debt and $13,000 of nonrecourse debt at the end of the year. During the year, she was allocated $60,000 of partnership ordinary business loss. Jenna does not materially participate in this partnership and she has $2,000 of passive income from other sources a. How much of Jenna's loss is limited by her tax basis? Loss limited by her tax basis

Answer 1

Answer:

Requirements (a)

Particular	Amount
Non recourse debt ending (40000 beg tax basis+5000 (13000-8000) rise in non recourse debt allocation)	45000
Less non recourse debt beginning	(40000)
Increase in non recourse debt	5000
Particular	Amount
Beginning tax basis	40000
Add increase in non recourse debt	5000
Closing tax basis	45000
Particular	Amount
Loss allocation	60000
Less closing tax basis	45000
Loss limited by her tax basis	15000

Requirements (c)

Loss remaining (40000-8000)	32000
Less passive income	2000
Loss limited by the passive activity	30000

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