Work must be shown to receive full credit please and thank you .11 Verizon? 8:25

Question

Work must be shown to receive full credit please and thank you
.11 Verizon? 8:25 PM Done ACC 4302 Exam # 3 (Spring) 13. The MOP Partnership is involved in construction activities. Patricia has an adjusted basis for her partnership interest on January 1 of the current year of S600,000, consisting of the following apital account 350,00 Share of partnership recourse debt 50,00 Share of partnership nonrecourse deb 20000 During the year, the partnership has an operating loss of $1.2 million and distributes $60,000 of cash to Patricia. Partnership liabilities were the same at the end of the tax year, and the nonrecourse debt is not "qualified nonrecourse debt." If she owns a 60% share of partnership profits, capital, and losses, and is an active ("material) participant in the partnership, how much of her share of the operating loss can Patricia deduct? What Code provisions could cause a suspension of the loss?

Explanation / Answer

Particia's share of loss=1200000*60%=$720000 Particia's basis before deduction=600000-60000=$540000 The amount of loss that can be deducted first limited by Particia's basis of $540000 Remaining loss limited by at-risk amount At-risk amount=600000-60000-200000=$340000 Hence, she can deduct $340000 loss on her return Adjusted basis S 704(d) At-risk amount S 465 Passive loss rule S 469

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