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he TimpRiders LP has operated a motorcycle dealership for a number of years. Amir is the limited partner, Francesca is the general partner, and they

he TimpRiders LP has operated a motorcycle dealership for a number of years. Amir is the limited partner, Francesca is the general partner, and they share capital and profits equally. Francesca works full time managing the partnership. Both the partnership and the partners report on a calendar-year basis. At the start of the current year, Amir and Francesca had bases of $11,500 and $3,500, respectively, and the partnership did not have any liabilities. During the current year, the partnership reported the following results from operations:
Net sales $ 666,000
Cost of goods sold 505,000
Operating expenses 175,000
Short-term capital loss 5,000
Tax-exempt interest 2,500
1231 gain 6,500
On the last day of the year, the partnership distributed $3,500 each to Amir and Francesca.
Comprehensive Problem 09-81 Part 1(Algo)
Required:
What outside basis do Amir and Francesca have in their partnership interests at the end of the year?
How much of their losses are currently not deductible by Amir and Francesca because of the tax-basis limitation?
To what extent does the passive activity loss limitation apply in restricting their deductible losses for the year?

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