Molly acquired a 30 interest in BG LLP in 2017 for 48000 At

Molly acquired a 30% interest in BG LLP in 2017 for $48,000.  At the start of 2018, Molly\'s adjusted basis and her at-risk amount in her BG interest is $20,000. In 2018, BG incur a loss of $90,000 (Molly\'s share is $27,000).  BG makes no distributions to any partners. In 2019, BG earns income of $16,000. Molly contributes an additional $5,000 to BG in 2019.  Molly has no other passive income in either year. Using this information, answer the following:

a. What is the amount of suspended loss due to the basis limitations at the end of 2018?

b. What is the amount of suspended loss due to the at-risk limitation at the end of 2018?

c. What is the amount of passive loss deducted in 2018?

d. What is the amount of passive loss suspended at the end of 2018?

e. What is Molly\'s adjusted basis at the end of 2019?

f. What is Molly\'s at-risk amount at the end of 2019?

g. What is Molly\'s suspended loss under the passive activity rules at the end of 2019?

Solution

A. Molly adjusted basis at end of 2018 is 20000

Molly share of loss - 27000

Molly suspended loss is 7000

B. Molly suspended loss due to at risk limitation is 27000-20000 = 7000

C. Bg passive loss is 90000

Molly passive loss share is 27000

Molly passive loss deducted is 20000.

D. Molly passive loss suspended is 7000 in 2018.

E. Molly adjusted basis at beginning of 2019 is zero.

At end of 2019, molly adjusted basis is 0+4800+5000 - 7000= 2800

F. Molly at risk amount is also 2800.

g. Suspended loss due to passive activity rules is 7000-4800= 2200