Jack owns a 10% interest in a partnership (not real estate) in which his at-risk amount is $42,000 at the beginning of the year. During the

Question

Jack owns a 10% interest in a partnership (not real estate) in which his at-risk amount is $42,000 at the beginning of the year. During the year, the partnership borrows $80,000 on a nonrecourse note and incurs a loss of $60,000 from operations. Jack’s at-risk amount at the end of the year is $44,000.

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Eden 2 weeks 2021-11-23T16:13:43+00:00 1 Answer 0

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    2021-11-23T16:15:19+00:00

    Answer:  The correct answer is :  False

    Step-by-step explanation:  Jack’s year-end risk amount is:

    10% loss :  $ 60,000 x 10% = $ 6,000

    $ 42,000 – $ 6,000 = $ 36,000, this is the value of Jack’s year-end risk amount

    The amount a taxpayer has at risk is increased by the taxpayer’s share of additional recourse debt and decreased by the share of losses from the activity. The at-risk amount is not affected by nonrecourse debt.

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