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The Brady Partnership had an ordinary operating loss of $400,000 for the current year. Lonnie has...

The Brady Partnership had an ordinary operating loss of $400,000 for the current year. Lonnie has a 30% interest in the partnership, and he materially participates in the partnership's business. At the beginning of the year, Lonnie's adjusted basis in the partnership was $50,000. During the year, the partnership borrowed $100,000, which was the only outstanding debt at year end. Both partners are personally liable for the partnership's debt, and there are no special agreements. What amount can Lonnie claim as a loss on his current-year individual income tax return?

A

$50,000
B

$120,000
C

$80,000
D

$150,000
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Answer #1

Answer

B . 120000

lonnie claim as on his current year loss by individual income tax return

30 % interest on his own claims = 30 % * 40000

= 120000

120000 as a loss in income tax returns

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