Judy owns a 20% interest in a partnership (not real estate) in which her at-risk amount was $35,000 at the beginning of the year. The partnership borrowed $50,000 on a recourse note and made a $40,000 profit during the year. Her at-risk amount at the end of the year is $43,000.

Question

Quizplus · Accepted Answer

Judy's at-risk amount increases by her share of the partnership's profit and her share of the recourse debt. Her share of the profit is $8,000 (20% of $40,000), and her share of the recourse debt is $10,000 (20% of $50,000). Therefore, her at-risk amount at the end of the year is $35,000 + $8,000 + $10,000 = $53,000.

Judy Owns a 20% Interest in a Partnership (Not Real