Clint Noticed That the Schedule K-1 He Just Received from ABC

question 12

Essay

Clint noticed that the Schedule K-1 he just received from ABC Partnership included a $20,000 ordinary business loss allocation. His tax basis in ABC at the beginning of ABC's most recent tax year was $10,000. Comparing the Schedule K-1 he recently received from ABC with the Schedule K-1 he received from ABC last year, Clint noted that his share of ABC partnership debt changed as follows: recourse debt increased from $0 to $2,000, qualified nonrecourse debt increased from $0 to $3,000, and nonrecourse debt increased from $0 to $3,000. Finally, the Schedule K-1 Clint recently received from ABC reflected a $1,000 cash contribution he made to ABC during the year.Clint is not a material participant in ABC Partnership, and he received $10,000 of passive income from another investment during the same year he received the loss allocation from ABC. How much of the $20,000 loss from ABC can Clint deduct currently, and how much of the loss is suspended because of the tax basis, at-risk, and passive activity loss limitations?

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Definitions:

Investor Confidence

The level of trust that investors have in the stability and potential profitability of financial markets or specific investments.

Corporate Scandals

Major failures of ethics and governance within corporations, often leading to legal penalties or public outrage.

Leadership Value

The perceived importance and effectiveness of leadership within an organization or society, influencing culture and performance.

Leader-Follower Relationship

The dynamic interaction between individuals in leadership positions and those who follow their guidance or directives.