Jay has a tax basis of $14,000 in his partnership interest at the beginning of the partnership tax year. The following amounts of partnership debt were allocated to Jay and are included in his beginning-of-the-year tax basis: (1)recourse debt-$3,000, (2)qualified nonrecourse debt-$1,000, and (3)nonrecourse debt-$500. There were no changes to the debt allocated to Jay during the tax year. If Jay is allocated a $15,000 loss for the current year, how much of the loss will be suspended under the tax basis and at-risk limitations?
A)$500, $1,000
B)$1,000, $500
C)$0, $0
D)$14,000, $1,000

Question

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The Answer of Jay has a tax basis of $14,000 in his partnership interest at the beginning of the partnership tax year. The following amounts of partnership debt were allocated to Jay and are included in his beginning-of-the-year tax basis: (1)recourse debt-$3,000, (2)qualified nonrecourse debt-$1,000, and (3)nonrecourse debt-$500. There were no changes to the debt allocated to Jay during the tax year. If Jay is allocated a $15,000 loss for the current year, how much of the loss will be suspended under the tax basis and at-risk limitations?
A)$500, $1,000
B)$1,000, $500
C)$0, $0
D)$14,000, $1,000

Jay Has a Tax Basis of $14,000 in His Partnership