Ask Question
BusinessBusiness
23 May, 20:27

In 2019, Liam invested $100,000 for a 25% interest in a partnership involved in an activity in which he is a material participant. The partnership reported losses of $340,000 in 2019 and $180,000 in 2020 with Liam's share being $85,000 in 2019 and $45,000 in 2020. How much of the losses can Liam deduct? a.$85,000 in 2019, $0 in 2020. b.$85,000 in 2019, $15,000 in 2020. c.$0 in 2019, $0 in 2020. d.$85,000 in 2019, $45,000 in 2020. e. None of these choices are correct.

+5
Answers (1)
  1. 23 May, 23:30
    0
    Hence, Option C ($85,000 in 2019, $15,000 in 2020) is the correct answer.

    Explanation:

    Step 1. Given information.

    A partner can deduct partnership losses only upto his adjusted basis in the partnership.

    So, for 2019; Liam can deduct full loss of $85,000 (since adjusted basis is $100,000)

    Step 2. Formulas needed to solve the exercise.

    For year 2020, his adjusted basis = Invested value - Liam's share.

    Step 3. Calculation.

    100,000 - 85,000 (Loss of 2019) = $15,000

    So, for 2019; Liam can deduct loss only upto $15,000 (although his share of loss comes out to be $45,000). The remaining loss of 30,000 (being 45,000 minus 30,000) will be available to him in the last year of partnership.

    Step 4. Solution.

    Hence, Option C ($85,000 in 2019, $15,000 in 2020) is the correct answer.
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “In 2019, Liam invested $100,000 for a 25% interest in a partnership involved in an activity in which he is a material participant. The ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers
You Might be Interested in
The following labor standards have been established for a particular product: Standard labor-hours per unit of output 10 hours Standard labor rate $ 13.
Answers (1)
If Wild Widgets, Inc., were an all-equity company, it would have a beta of 0.9. The company has a target debt-equity ratio of. 4. The expected return on the market portfolio is 12 percent, and Treasury bills currently yield 4.1 percent.
Answers (1)
How do I make a resume for applying for a job for the first time?
Answers (1)
Sky High Seats manufactures seats for airplanes. The company has the capacity to produce? 100,000 seats per? year, but is currently produces and sells? 75,000 seats per year.
Answers (1)
The 80/20 principle holds that 20 percent of all customers generate 80 percent of the demand. Although the percentages usually are not exact, the general idea often holds true. Which consumer market segment is described here
Answers (1)
New Questions in Business
The major benefit of diversification is the: a. increased expected return. b. removal of all negative risk assets from the portfolio. c. reduction in the portfolio's total risk. d. reduction in the portfolio's systematic risk.
Answers (1)
Dougherty Corporation purchased a new delivery van for use in its dry-cleaning business. As part of the purchase of the van the following costs were incurred: Acquisition cost 30,000, Sales tax 1,800, Title transfer 250, paid to the company logo on
Answers (1)
Horatio Alger is the product manager for Brand X, a consumer product with a retail price of $1.20. Retail margins are 35% while wholesalers take an 11.5% margin.
Answers (1)
Explain what is meant by market research.
Answers (1)
Jean, a restaurant critic, publishes a review in a national daily that the sandwiches served at his friend's deli are usually not fresh. Tom, the owner of the deli, notices a significant decrease in customers after the review gets published.
Answers (1)
Home » Business » In 2019, Liam invested $100,000 for a 25% interest in a partnership involved in an activity in which he is a material participant.
Sign Up Forgot Password?