Mary and Gary are partners in the MG Partnership Mary owns a 40 capital, profits, and loss interest Gary owns the remaining interest Both materially participate in partnership activities At the beginning of the current year, MGs only liabilities are $30,000 in accounts payable, which remain outstan...

Gary General Partner60 Mary General Partner40 Tax Basis AtRis ...

Mary and Gary are partners in the MG Partnership. Mary owns a 40% capital, profits, and loss

Question:

Mary and Gary are partners in the MG Mary owns a 40% capital, profits, and loss interest. Gary owns the remaining interest. Both materially participate in activities. At the beginning of the current year, MG’s only liabilities are $30,000 in accounts payable, which remain outstanding at year-end. In November, MG borrows $100,000 on a nonrecourse basis from First Bank. The loan is secured by property with a $200,000 FMV. These are MG’s only liabilities at year-end. Bases for the interests at the beginning of the year are $80,000 for Mary and $120,000 for Gary after considering the impact of liabilities but before considering operations. MG has a $200,000 ordinary loss during the current year. How much loss can Mary and Gary recognize? 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...