Juan Diego began the year with a tax basis in his partnership interest of $$54,000.$ During the year, he was allocated $$21,600$ of partnership ordinary business income, $$75,600$ of $1231$ losses, and $$32,400$ of short$-$term capital losses and received a cash distribution of $$54,000.$

Note: Do not round intermediate calculations.

a$.$ What items related to these allocations does Juan Diego actually report on his tax return for the year? $[$Hint: See Regulations $1\mathrm{.}704-1($d$)(2)$ and Revenue Rule $66-94.]$

b$.$ If any deductions or losses are limited$,$ what are the carryover amounts, and what is their character? $[$Hint: See Regulations $1\mathrm{.}704-1($d$).]$

Answer rating: 100% (QA)

Answer Lets break down the items that Juan Diego reports on his tax return for the year and identify ... View the full answer