Fran and Robert own 40% and 60%, respectively, of the RF Partnership. Fran is the general partner and Robert is a limited partner. Fran works full-time in the business. Robert is basically an investor in the firm and works full-time at another job. He has no other income except his salary from his employer. During the current year, the partnership reports the following gain and loss:

Ordinary loss $140,000

Long-term capital gain $20,000

Before including the current year's gain and loss, Fran and Robert had $46,000 and $75,000 bases for their partnership interests, respectively. The partnership has no nonrecouse liabilities. Tom has no further obligation to make any additional investment in the partnership.

Required:

What gain or loss should each partner report on his or her individual tax return?

Question

Business

Cedric Wilkerson

15 February, 13:54

Fran and Robert own 40% and 60%, respectively, of the RF Partnership. Fran is the general partner and Robert is a limited partner. Fran works full-time in the business. Robert is basically an investor in the firm and works full-time at another job. He has no other income except his salary from his employer. During the current year, the partnership reports the following gain and loss:

Ordinary loss $140,000

Long-term capital gain $20,000

Before including the current year's gain and loss, Fran and Robert had $46,000 and $75,000 bases for their partnership interests, respectively. The partnership has no nonrecouse liabilities. Tom has no further obligation to make any additional investment in the partnership.

Required:

What gain or loss should each partner report on his or her individual tax return?

+4

Answers (1)

Know the Answer?

Moody · Answer 1

Fran losses - 2000 and Robert gains 3000

Explanation:

Solution

Recall that,

Fran and Robert own Rf Partnership of 40% and 60% respectively.

Ordinary loss = $140,000

Long-term capital gain = $20,000

Before including the current year's gain and loss,

Frank and Robert had bases for their interest partnership = $46,000 and $75,000

Needed: What gain or loss should each partner report on his or her individual tax return

Now,

Particulars Fran ($) Robert ($)

The Interest Basis 46000 75000

Add Long-term Capital gain

($20000*40/100) (20000*60/100) 8000 12000

The Income before losses 54000 87000

Less:ordinary loss

(140000*40/100) (140000*60/100) 56000 84000

Gain or loss to be reported - 2000 3000

Therefore Fran losses - 2000 and Robert gains 3000