Question: Mrs. Z owns a 65% general interest in YZ Partnership. At the beginning of 2016, Mrs. Z's adjusted basis in her partnership interest was $85,000. For 2016, the partnership generated a $235,000 business loss, earned $14,200 dividend and interest income on its investments, and recognized a $7,000 gain on the sale of a capital asset. The partnership made no distributions to its partners and had no debt.
How much of her distributive share of YZ's loss can Mrs. Z deduct on her 2016 tax return? What is her suspended loss under Section 704(d), if any?
Compute Mrs. Z's adjusted basis in her partnership interest at the end of 2016.
How would your answer change in a above if Mrs. Z received an $8,000 distribution from the partnership in June of 2016?
In 2017, YZ Partnership generated $17,000 ordinary business income and $13,000 dividend and interest income. The partnership made no distributions. How much partnership income will Mrs. Z report on her 2017 tax return, assuming the facts in a above? What, if any, of the suspended loss is left?
Compute Mrs. Z's adjusted basis in her partnership interest at the end of 2017.