J and K decided they wanted to get in the rental real estate business.This year J and K formed a partnership.The partnership bought a 200 unit complex called Lazy Acres from the Trumpet Group for $1,000,000.The partnership gave Trumpet $200,000 cash and a note for $800,000 which was secured by the apartment complex.The partnership borrowed the cash from the First National Bank of Boston and secured the loan with a parcel of land that it owned.For purposes of the at-risk rules, the amount of debt secured by the land is included in the at-risk amount.

Question

Quizplus · Accepted Answer

According to the at-risk rules, debt that is secured by property owned by the taxpayer is included in the at-risk amount. Therefore, the loan secured by the parcel of land owned by the partnership must be included in the at-risk amount for J and K's partnership.

J and K Decided They Wanted to Get in the Rental