Joey and Bob each have 50% interest in a Partnership.Both Joey and the partnership file returns on a calendar-year basis.Partnership Q had a $12,000 loss in 2016.Joey's adjusted basis in his partnership interest on January 1,2016,was $5,000.In 2017,the partnership had a profit of $10,000.Assuming there were no other adjustments to Joey's basis in the partnership,what amount of partnership income (loss)should Joey show on his 2016 and 2017 individual income tax returns?

Question

Quizplus · Accepted Answer

A)2016-Joey's share of the loss is $6,000,but due to the basis limitations,he can only recognize $5,000; the remaining $1,000 carries forward to 2017.2017-Joey's share of the income is $5,000 which can be netted with the $1,000 loss carryforward,resulting in $4,000 of income recognized.

Joey and Bob Each Have 50% Interest in a Partnership