Correct answer this question has been adapted from

Correct Answer:
* This question has been adapted from the IRS Examinations.
$0. Emil's basis in his partnership interest is computed as follows:
Adjusted basis of property contributed $3,000
Less: Portion of mortgage assumed by other partners which must be
treated as a distribution of money to Emil (50% x $80,000)
40,000
Tentative basis of Emil's partnership interest ($10,000)
Since Emil's basis in his partnership interest cannot be less than zero, the $10,000
in excess of basis is treated as capital gain to Emil from the sale or exchange of a
capital asset.

82. For the tax year 2013 the Hapless Partnership incurred a loss from
its operations of $10,000, a short-term capital loss of $4,000 and a
long-term capital loss of $2,000. At the beginning of 2013, Herman
Horst, a 50 percent partner, had a basis for his partnership interest
of $3,000. How much loss deduction may Herman claim for 2013? What is
its character? What loss deferrals does he have? What are their
characters?
Correct Answer:
Herman's share of the partnership losses for 2013 is $8,000. However,
his loss deduction is limited to his basis in his partnership interest,
$3,000.
Herman's
Current
Deduction
Herman's
Loss
Deferred
Ordinary 5/8
($10,000/$16,000
) x $3,000
$1,875 $3,125
Short-term 2/8
($4,000/$16,000)
x $3,000
750 1,250
Long-term 1/8
($2,000/$16,000)
x $3,000
375 625
$3,000 $5,000
83. Abe Alpert has a 20 percent interest in a partnership and he
materially participates in the partnership's business. His adjusted
basis was $10,000 at the beginning of 2013. During 2013 the partnership
borrowed $160,000 to purchase equipment and pay off an existing note
with a balance of $100,000. All of the partners are personally liable
for all partnership debts. The partnership sustained a $300,000 loss in
2013. What amount can Abe claim as a loss from the partnership on his
2013 individual return?
Correct Answer:
Abe may claim a $22,000 loss on his 2013 return. He can deduct his loss
only to the extent of the adjusted basis (including his share of the
partnership liabilities). Even though his loss is 20 percent of the
$300,000 loss ($60,000), he can deduct only $22,000 ($10,000 basis plus
$12,000 [20% x ($160,000 - $100,000)] of liabilities). His adjusted
basis for the next calendar year is zero, and he has a $38,000 loss
carryover.

84. Agnes Aurora gave 50 percent of her business to her son Bobby. The
partnership had a profit of $100,000 for the year and capital is a
material income producing factor. Agnes performed services worth
$25,000 as reasonable compensation and Bobby performed no services.
What is the maximum amount of income Bobby can report from the
partnership for the year?
Correct Answer:
Bobby can report a maximum of $37,500 in partnership income. Agnes, as
donor of a family partnership interest, must be allocated an amount of
partnership income that represents reasonable compensation for the
services she rendered to the partnership, i.e., $25,000. The remainder
of the income can be divided between Ms. Aurora and Bobby, so the
maximum Bobby could receive is half of the remaining $75,000, which is
$37,500.