12-19 Passive-Activity Limitations. M is a successful banker. Two years ago, M's 27.v year old son, J, asked his dad to become his partner in opening a sporting goods st M agreed and contributed $50,000 for a 50% interest in the partnership. J Opera the store on his own, receiving little advice from his father. Information rega M's financial activities reveals the following for the past two years: Interest Income Partnership Income (Loss Salary $100,000 100,000 Year 2018 2019 $20,000 20,000 $(40,000) 12,000 All parties are cash basis, calendar year taxpayers. Answer the following questions. a. How did M's investment in the partnership affect his AGI in 2018? b. How did M's investment in the partnership affect his AGI in 2019? c. Would your answer to (b) change if the partnership had a loss in 2019 and the in- come shown was from M's interest as a limited partner in a real estate venture? On January 1,2020, M sold his interest in the partnership to his son for a $40,000 gain. What effect? d. 12-19 Passive-Activity Limitations. M is a successful banker. Two years ago, M's 27.v year old son, J, asked his dad to become his partner in opening a sporting goods st M agreed and contributed $50,000 for a 50% interest in the partnership. J Opera the store on his own, receiving little advice from his father. Information rega M's financial activities reveals the following for the past two years: Interest Income Partnership Income (Loss Salary $100,000 100,000 Year 2018 2019 $20,000 20,000 $(40,000) 12,000 All parties are cash basis, calendar year taxpayers. Answer the following questions. a. How did M's investment in the partnership affect his AGI in 2018? b. How did M's investment in the partnership affect his AGI in 2019? c. Would your answer to (b) change if the partnership had a loss in 2019 and the in- come shown was from M's interest as a limited partner in a real estate venture? On January 1,2020, M sold his interest in the partnership to his son for a $40,000 gain. What effect? d