Alfonso began the year with a tax basis in his partnership interest of $30,000. His share of

Question:

Alfonso began the year with a tax basis in his interest of $30,000. His share of debt at the beginning and end of the year consists of $4,000 of recourse debt and $6,000 of nonrecourse debt. During the year, he was allocated $40,000 of ordinary business loss. Alfonso does not materially participate in this and he has $1,000 of passive income from other sources.
a. How much of Alfonso's loss is limited by his tax basis?
b. How much of Alfonso's loss is limited by his at-risk amount?
c. How much of Alfonso's loss is limited by the passive activity loss rules?
Partnership
A legal form of business operation between two or more individuals who share management and profits. A Written agreement between two or more individuals who join as partners to form and carry on a for-profit business. Among other things, it states...