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Partner X of the XYZ equal partnership (1/3 to each partner) has a total basis in...

Partner X of the XYZ equal partnership (1/3 to each partner) has a total basis in her partnership interest of $30,000. The partnership has $21,000 of nonqualified nonrecourse debt, and no recourse debt. XYZ has a current ordinary loss of ($120,000). X does not materially participate in XYZ, and also has another passive activity for which her share of the income for the year is $5,000.

a. How much X’s share of the XYZ loss is deductible, and how much and at what level (basis, at-risk amount, passive activity loss) are X’s carryovers to the next year?

b. If partner X in the previous example, # 2, sold her interest in XYZ at the beginning of the next year for $50,000, by how much would the sale increase her taxable income?

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