As of January 1, 2017, Norman has a basis of $85,000 in his 30% capital interest in

Question:

As of January 1, 2017, Norman has a basis of $85,000 in his 30% capital interest in the Plata Partnership. He and the partnership use the calendar year for tax purposes. The partnership incurs an operating loss of $440,000 for 2017 and a profit of $285,000 for 2018.

a. How much, if any, loss may Norman recognize for 2017?

b. How much income must Norman recognize for 2018?

c. What basis will Norman have in his partnership interest as of January 1, 2018?

d. What basis will Norman have in his partnership interest as of January 1, 2019?

e. What year-end tax planning would you suggest to ensure that a partner could deduct all of his or her share of any partnership losses?

Partnership
A legal form of business operation between two or more individuals who share management and profits. A Written agreement between two or more individuals who join as partners to form and carry on a for-profit business. Among other things, it states...

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