Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

  1. The 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 $10,000 and $3,000 respectively, and the partnership did not have any liabilities. During the current year, the partnership reported the following results from operations:

Net sales $650,000

Cost of goods sold $500,000

Operating expenses $160,000

Short-term capital loss $2,000

Tax-exempt interest $2,000

  • 1231 gain $6,000

On the last day of the year, the partnership distributed $3,000 each to Amir and Francesca.

  1. What outside basis do Amir and Francesca have in their partnership interests at the end of the year?
  2. How much of their losses are currently not deductible by Amir and Francesca because of the tax-basis limitation?
  3. To what extent does the passive activity loss limitation apply in restricting their deductible losses for the year?
  4. Using the information provided, prepare TimpRiders page 1 and Schedule K to be included with its Form 1065 for the current year. Also, prepare a Schedule K-1 for Amir and Francesca.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Auditing A Business Risk Approach

Authors: Karla Johnstone, Audrey Gramling, Larry Rittenberg

8th edition

538476230, 978-0538476232

More Books

Students also viewed these Accounting questions

Question

What is quality of work life ?

Answered: 1 week ago

Question

What is meant by Career Planning and development ?

Answered: 1 week ago

Question

What are Fringe Benefits ? List out some.

Answered: 1 week ago

Question

3. What would you do now if you were Mel Fisher?

Answered: 1 week ago

Question

14.3 Explain WHMISlegislation.

Answered: 1 week ago