4. As of January 1 of 2019, Eddies basis (all at-risk) in his 25% interest in Just in Time Partnership was $25,000. He and the partnership use the calendar year for tax purposes. The partnership incurred an ordinary loss of $130,000 in 2019 and had ordinary income of $16,000 in 2020. The partnership had no separately stated items and partnership debts did not change during either 2019 or 2020. Eddie is a material participant in the partnership. Eddies cumulative excess business losses will be less than the applicable limit.

a. How much loss, if any, may Eddie deduct in 2019, and what is his basis in his partnership interest at the end of 2019?

b. How much net reportable income must he recognize in 2020 and what is his basis in his partnership interest at the end of 2020?

c. How would your answers to parts (a) and (b) change if Eddie was NOT a material participant and had no passive income from any other source?