Marshall has a one-third capital and profits interest in theBlue Stone General Partnership. On...

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Accounting

Marshall has a one-third capital and profits interest in theBlue Stone General Partnership. On January 1, year 1, Blue Stonehas $120,000 of general debt obligations and Marshall has a $50,000tax basis (including his share of Blue Stone’s debt) in hispartnership interest. During the year, Blue Stone incurred a$30,000 nonrecourse debt that is not secured by real estate.Because Blue Stone is a rental real estate partnership, Marshall isdeemed to be a passive participant in Blue Stone. His share of theBlue Stone losses for year 1 is $75,000. Marshall is not involvedin any other passive activities, and this is the first year he hasbeen allocated losses from Blue Stone.
Determine how much of the Blue Stone loss Marshall willcurrently be able to deduct on his tax return for year 1, and listthe losses suspended due to tax-basis, at-risk, and passiveactivity loss limitations.
If Marshall sells his interest on January 1, year 2, whathappens to his suspended losses from year 1?
Research aids: See §706(c)(2)(A), Reg. §1.704-1(d)(1). Prop.Reg. §1.465-66(a), and Sennett v. Commissioner, 80 T.C.825 (1983).

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a Requirement Marshall will not deduct any losses currently and the loss which is limited is shown below in the table Particulars Tax Basis Limitation At Risk Limitation Passive activity limitation Explanation 1 Beginning tax 50000 50000 Since in the case of general partnership basis and which Marshall beginning at risk amount will be is at See Answer

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In: AccountingMarshall has a one-third capital and profits interest in theBlue Stone General Partnership. On January...Marshall has a one-third capital and profits interest in theBlue Stone General Partnership. On January 1, year 1, Blue Stonehas $120,000 of general debt obligations and Marshall has a $50,000tax basis (including his share of Blue Stone’s debt) in hispartnership interest. During the year, Blue Stone incurred a$30,000 nonrecourse debt that is not secured by real estate.Because Blue Stone is a rental real estate partnership, Marshall isdeemed to be a passive participant in Blue Stone. His share of theBlue Stone losses for year 1 is $75,000. Marshall is not involvedin any other passive activities, and this is the first year he hasbeen allocated losses from Blue Stone.Determine how much of the Blue Stone loss Marshall willcurrently be able to deduct on his tax return for year 1, and listthe losses suspended due to tax-basis, at-risk, and passiveactivity loss limitations.If Marshall sells his interest on January 1, year 2, whathappens to his suspended losses from year 1?Research aids: See §706(c)(2)(A), Reg. §1.704-1(d)(1). Prop.Reg. §1.465-66(a), and Sennett v. Commissioner, 80 T.C.825 (1983).