On January 20, 2020, Dr. Austin contributed undeveloped land to Hallmark in exchange for a 38 percent limited partnership interest (i.e., Dr.Austin will receive 40 percent of the 95 percent allocations to the limited partners). Channel, as general partner, agreed to this exchange because the land is ideally situated for future development as residential rental property. Dr. Austin inherited the land a number of years ago and her tax basis in the property is only $125,000; the appraised value of the land at date of contribution was $275,000 and the entry to Dr.Austins partnership capital account properly reflected this contributed value. The partnership agreement provides that limited partners cannot be called upon to make additional capital contributions in the future.

Dr. Austin is a plastic surgeon employed by a medical professional corporation. During 2020, she received a salary of $230,000. She also received a total of $19,400 of dividend and interest income from her investment portfolio, and an allocation of $13,200 of operating business income from a partnership in which she has a 3 percent limited partnership interest.

Hallmark Real Estate Limited Partnership

Operating Revenues and Expenses

For January 1December 31, 2020

Gross rental revenue $2,100,000

Monthly operating expenses $1,675,000

Repairs and maintenance $212,000

Interest expense $562,000

Property taxes $188,000

Total expenses $2,637,000

Net cash flow from operations* ($537,000)

*Hallmark financed the negative cash flow from operations by fully recourse short-term borrowing. The management fee has not been included in expenses.

Assignment Requirements

Determine the amount of the income or loss that is (1) allocable to and (2) deductible by Dr. Austin on her 2020 Federal individual income tax return.