Loss is disallowed due to her tax basis or at-risk amount

Assignment Help Financial Accounting

Reference no: EM131296142

Sue invested $5,000 in the ABC General Partnership and received a 10 percent interest in the partnership. The partnership had $40,000 of unsecured debt. Sue is allocated a 10 percent share of the debt resulting in a tax basis of $9,000 and at risk amount of $9,000. During the year, ABC GP generated a ($90,000) loss. How much of Sue's loss is disallowed due to her tax basis or at-risk amount?

a) Zero; all of her loss is allowed to be deducted

b) $2,000 disallowed because of her at-risk amount

c) $2,000 disallowed because of her tax basis

d) $4,000 disallowed because of her tax basis

e) $4,000 disallowed because of her at-risk amount

Explain the procedure,

Reference no: EM131296142

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