Question

Molly Grey (single) acquired a 30 percent limited partnership interest in Beau Geste LLP several years ago for $56,000. 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 $187,500 and does not make any distributions to the partners.
-In year 1, Molly's AGI (excluding any income or loss from Beau Geste) is $67,800. This includes $13,800 of passive income from other passive activities.

-In year 2, Beau Geste earns income of $38,400. In addition, Molly contributes an additional $31,380 to Beau Geste during year 2. Molly's AGI in year 2 is $71,700 (excluding any income or loss from Beau Geste). This amount includes $10,160 in income from her other passive investments.

Based on the above information, complete the following tables: (Leave no answers blank. Enter zero if applicable.) What are the cumulative total passive suspended losses at the end of year 2?

Answer 1

Answer:

$20,770

Explanation:

Share of passive loss in year 1

[187,500 × 30%]

$56,250

Less: Passive income from other activities

($13,800)

Suspended loss in year 1

$42,450

Less: Share of passive income from Beau Geste in year 2 (38,400 × 30%).

($11,520)

Less passive income from other activities

($10,160)

Cumulative total passive suspended losses at the end of year 2.

$20,770