Question - What tax issues should Jorge consider with respect to reporting the results of this year's activities for the EFJ Partnership on his personal return?
Jorge, a limited partner in the EFJ Partnership, has a 20% interest in partnership capital, profits, and losses. His basis in the partnership interest is $20,000 before accounting for events from the current year. In December of the current year, the EFJ Partnership repaid a $100,000 nonrecourse liability. The partnership earned $20,000 of ordinary income this year.