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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
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, 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 partnership interests 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 from operations during the current year. Requirement How much loss can Mary and Gary recognize? Mary will recognize a loss of Gary will recognize a loss of
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