Question

Fran and Robert own 40% and 60%, respectively, of the RF Partnership. Fran is the general partner and Robert is a limited partner. Fran works full-time in the business. Robert is basically an investor in the firm and works full-time at another job. He has no other income except his salary from his employer. During the current year, the partnership reports the following gain and loss:
Ordinary loss $140,000
Long-term capital gain $20,000

Before including the current year's gain and loss, Fran and Robert had $46,000 and $75,000 bases for their partnership interests, respectively. The partnership has no nonrecouse liabilities. Tom has no further obligation to make any additional investment in the partnership.

Required:
What gain or loss should each partner report on his or her individual tax return?

Answer 1

Answer:

Fran losses -2000 and Robert gains 3000

Explanation:

Solution

Recall that,

Fran and Robert own Rf Partnership of 40% and 60% respectively.

Ordinary loss =$140,000

Long-term capital gain = $20,000

Before including the current year's gain and loss,

Frank and Robert had bases for their interest partnership = $46,000 and $75,000

Needed: What gain or loss should each partner report on his or her individual tax return

Now,

Particulars                                       Fran ($)   Robert($)

The Interest Basis                             46000    75000

Add Long-term Capital gain

($20000*40/100)(20000*60/100)    8000       12000

The Income before losses                54000     87000

Less:ordinary loss    

(140000*40/100)(140000*60/100)  56000       84000

Gain or loss to be reported               -2000        3000

Therefore  Fran losses - 2000 and Robert gains 3000