Alcott invested $20,000 for a 25% interest in a partnership (not a passive activity) on January 1,

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Alcott invested $20,000 for a 25% interest in a partnership (not a passive activity) on January 1, 2019. The partnership borrowed $100,000 (with full recourse to the partners) on January 15, 2019, to cover short-term cash flow requirements. During the year, the partnership generated a$60,000 loss. By December 31, 2019, the partnership had paid off $20,000 of the loan. What is Alcott’s at-risk amount on January 1, 2020?

a. $20,000.

b. $25,000.

c. $40,000.

d. $45,000.

Partnership
A legal form of business operation between two or more individuals who share management and profits. A Written agreement between two or more individuals who join as partners to form and carry on a for-profit business. Among other things, it states...
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Fundamentals Of Taxation 2020 Edition

ISBN: 9781260483147

13th Edition

Authors: Ana Cruz, Michael Deschamps, Frederick Niswander, Debra Prendergast, Dan Schisler

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