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Nino and Sonja form a partnership. On January 1, each partner contributes $40,000 in cash to the partnership.

Nino and Sonja form a partnership. On January 1, each partner contributes $40,000 in cash to the partnership. During the year, the parternship borrows $100,000 that is secured by equipment they purchase. The loan is non recourse. On July 15th. the parternship distributed $10,000 each to Nino and Sonja. As of December 31, the balance on the loan was $80,000. The partnership has a loss for the year of $50,000.

What is Nino's basis before deducting any of the loss? How much does NIno have at risk? How much of the loss is deductible and how much of the loss is suspended?

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Nino basis before the loss was $0. The amount... View the full answer

  • I have a different answer : • Nino basis before the loss was $80,000. Initial Basis=$40,000 Share of liabilities (Sec. 752) =100,000/2=$50,000 Distribution =$10,000 Nino basis=40,000+50,000-10,000 =$80,000 •The amount at risk is $30,000 Initial amount at risk=$40,000 Share of liabilities (IRC Sec. 465) =$0 Distribution=$10,000 Amount at risk=$30,000 • Loss deductible $30,000; loss postponed/suspended $10,000 The amount of loss that would be deductible by John (assuming no other loss limitations apply) would be limited to the lesser of John's basis ($80,000) or the amount at-risk ($30,000). The remaining $10,000 (the difference between his share of the $40,000 loss and the $30,000 deducted) would be suspended until Adam has sufficient amounts at-risk
    • beraunchiok
    • May 06, 2018 at 12:21am
  • Follow the guideline I have provided.Thanks.
    • Lennah
    • May 06, 2018 at 8:17am

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