Question

For the tax year, OSH partnership reported a $74,000 ordinary loss and a $28,000 increase in recourse liabilities for which the partners are liable. Ashley, a 50% partner, had an adjusted basis of $15,000 at the beginning of the year. What is Ashley's allowable loss and her adjusted basis in OSH at the end of the year?

Answer 1

Answer:

Ashley's Allowable loss $15000, Adjusted Basis $0

Explanation:

Ashley's Share of loss = $74000 x 50% i.e. $37000

But since Ashley has adjusted basis of only $15000, therefore only $15000 loss can be adjusted and remaining will be adjusted in future years.

Therefore, Ashley's Allowable loss $15000, Adjusted Basis $0