Reference no: EM13906187
Molly Grey (single) acquired a 30 percent limited partnership interest in Beau Geste LLP several years ago for $48,000. At the beginning of year 1, Molly has tax basis and an at-risk amount of $20,000. In year 1, Beau Geste incurs a loss of $180,000 and does not make any distributions to the partners.
• In year 1, Molly's AGI (excluding any income or loss from Beau Geste) is $60,000. This includes $10,000 of passive income from other passive activities.
• In year 2, Beau Geste earns income of $30,000. In addition, Molly contributes an additional $30,000 to Beau Geste during year 2. Molly's AGI in year 2 is $63,000 (excluding any income or loss from Beau Geste). This amount includes $8,000 in income from her other passive investments.
a) Based on the above information, determine the following amounts:
• At-risk amount at the end of year 1
• At-risk amount at the end of year 2
• Losses allowed under the at-risk rules in year 2
• Total suspended passive losses at the end of year 1
• Total suspended at-risk losses at the end of year 2
• Deductible losses in year 1
• Year 2 AGI after considering Beau Geste events
b) Briefly describe actions Molly Grey could undertake in year 2 to utilize any suspended passive losses from year 1.
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