$******$

Scenario $5$:

Thomas is a $35\%$ partner in a partnership. The partnership incurred a net loss of $$250,000$ for the year, and Thomas's share of the loss is $$87,500.$ Thomas's initial basis in the partnership was $$100,000.$ He received a $$30,000$ cash distribution from the partnership. Thomas's other income includes:

Wages: $$120,000$

Interest and Dividend Income: $$4,000$

Itemized Deductions: $$35,000$

Allowable deduction for self$-$employment tax: None

How much of the partnership loss can Thomas deduct considering his basis, the at$-$risk limitations$,$ and passive activity loss rules?

How does the distribution affect his basis?

Calculate Thomas's Adjusted Gross Income $($AGI$).$

What is Thomas's Taxable Income?

What is Thomas's Total Tax Liability?