For the tax year, ABC partnership reported $68,000 ordinary loss and 30,000 incr

Question

For the tax year, ABC partnership reported $68,000 ordinary loss and 30,000 increase in recourse liabilities for which the partners are liable. And, the 50 percent owner, had an adjusted basis of $20,000 at the beginning of the year. What is Ann’s allowable loss and her adjusted basis in ABC at the end of the year? For the tax year, ABC partnership reported $68,000 ordinary loss and 30,000 increase in recourse liabilities for which the partners are liable. And, the 50 percent owner, had an adjusted basis of $20,000 at the beginning of the year. What is Ann’s allowable loss and her adjusted basis in ABC at the end of the year?

Explanation / Answer

Solution :- Allowable loss = 68000 * 50 %.

= $ 34,000.

Adjusted basis in ABC Partnership = (30000 * 50 % + 20000) - 34000.

= (15000 + 20000) - 34000

= 35000 - 34000

= $ 1,000.

Conclusion :-

Allowable loss $ 34,000. Adjusted basis in ABC Partnership $ 1,000.

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