Business income tax return

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Reference no: EM131069091

Business Income Tax return.

Michael invests in Buxus Interests, a partnership. Michael’s capital contribution to the partnership consists of $10,000 cash and equipment with an adjusted basis of $120,000 (fair market value of $150,000) subject to a nonrecourse liability of $60,000.

a- Calculate the amount that Michael is at-risk in the activity after making the above contribution.

b- If Michael’s share of the partnership loss in the year after he makes the contribution is $150,000, how much of the loss may be deducted in that year (before considering the limitations on passive losses)? Assume the partnership had no other transactions.

c- What may Michael do with the nondeductible part of the loss in part b?

Reference no: EM131069091

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