Question
At Risk Loss Limitation: Mary and Gary are partners in the MG Partnership. Mary owns 40% capital, profits, and loss interest. Gary owns the remaining
At Risk Loss Limitation: Mary and Gary are partners in the MG Partnership. Mary owns 40% capital, profits, and loss interest. Gary owns the remaining interest. Both materially participate in partnership activities. At the beginning of the curent year, MG's only liabilities are 30,000 in accounts payable, which remain outstanding at the 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 partnership 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?
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