5. Review the following scenario carefully. Clarence Hayes is a partner in Flower Drums, Ltd., a...

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5. Review the following scenario carefully. Clarence Hayes is a partner in Flower Drums, Ltd., a company that sells specialty planter boxes. He does not materially participate in the partnership and he has no passive income. All of his investment is at risk. His gross income is $150,000. His Schedule K-1 (Form 1065) showed a $6,000 loss in box 1 and a decrease in partnership liabilities of $1,000. He contributed $1,000 in March. He also had $1,100 of tax-exempt income reported on his Schedule K-1. Information needed for all four loss limitations has been provided, including his 2021 Federal Partnership K-1 Partner's Outside Basis Worksheet below. How much of Clarence's unallowed outside basis will be carried forward? 2021 FEDERAL PARTNERSHIP K-1 PARTNER'S OUTSIDE BASIS WORKSHEET CLARENCE HAYES Partnership Name: FLOWER DRUMS LTD Partnership EIN: 07-2350401 235-00-9041 PART I-PARTNER'S OUTSIDE BASIS I N R E A S E S 1. 2a. 26. b. 9. C $0 $900 $5,100 $6,000 d. 3 4a. b. D 12. E 13. C 14. R 15. E 10. A 17. S 18. E 19. $ 20. 21. 22. 23. 24. 25. C. C. 5. 6. 7. Ba b. Adjusted basis of distributed property Total distributions 10. 11. Adjusted basis at boginning of year. Not less than zero. Enter -0- if first tax year. Cash contributions... Property contributions (adjusted basis less associated liabilities), not less than zero Service contributions at fair market value (if taxed) Total contributions Increased share of or assumption of partnership liabilities Share income or gains (incl. tax-exempt income)(Part II, col a line 21 plus 22) Business interest expense included on 4a ******* Other current year basis decreases (Part II, col b, Ine 23). Prior year suspended other basis decreases (Part II, col c, line 23) 2a. b. C. 4a. Other basis decreases allowed this year (line 22 plus line 23, but not more than line 21) Disallowed other basis decreases this year (line 22 plus line 23 less line 24) Adjusted basis in the partnership at the end of the year (Lino 21 less line 24). Not less than zero b. Subtract line 4b from line 4a. If the result is less than zero, enter zero and carry the amount as positive on line 12 Other basis increases (Part II, col a, line 23) Total increases (Total lines 2d through 5) Adjusted basis before decreasos (line 1 plus line 6) Cash distributions.. Ba 1,000 b. 1,100 Decreased share of partnership liabilities Adjusted basis before additional decreases and expenses (line 7 less lines 8c and 9). Not less than zero Share of the partnership's current year losses and deductions (Part II, col b, line 21) Remaining business interest expense (line 4b less line 4a). Not less than zero Prior year suspended losses (Part II, col c, line 21 plus 24)..... Losses allowed this year (lines 11 through 13, but not more than line 10) Disallowed losses this year (line 11 through 13, less line 13) Adjusted basis before nondeductible expenses & other basis adjustments (in 10 less In 14). Not less than zero Share of the partnership's current year nondeductible expenses (Part II, col b. line 22) Prior year suspended nondeductible expenses (Part II, col c, line 22) Nondeductible expenses allowed this year (line 16 plus line 17, but not more than line 15) Disallowed nondeductible expenses this year (line 17 plus line 18 less line 19) Adjusted basis before other basis adjustments (line 16 less line 19). Not less than zero ******* Keep for Your Records 4,000 1. 2d. 3. 4c. 5. 6. 7. Bc. 9. 10, 11. 12. 13. 14, 15, 10. 17. 18. 19. 20, 21. 22. 23. 24, 25. 26. 1,000 1,100 2,100 6,100 1,000 5,100 6,000 5,100 900 0 0 10 0 0 5. Review the following scenario carefully. Clarence Hayes is a partner in Flower Drums, Ltd., a company that sells specialty planter boxes. He does not materially participate in the partnership and he has no passive income. All of his investment is at risk. His gross income is $150,000. His Schedule K-1 (Form 1065) showed a $6,000 loss in box 1 and a decrease in partnership liabilities of $1,000. He contributed $1,000 in March. He also had $1,100 of tax-exempt income reported on his Schedule K-1. Information needed for all four loss limitations has been provided, including his 2021 Federal Partnership K-1 Partner's Outside Basis Worksheet below. How much of Clarence's unallowed outside basis will be carried forward? 2021 FEDERAL PARTNERSHIP K-1 PARTNER'S OUTSIDE BASIS WORKSHEET CLARENCE HAYES Partnership Name: FLOWER DRUMS LTD Partnership EIN: 07-2350401 235-00-9041 PART I-PARTNER'S OUTSIDE BASIS I N R E A S E S 1. 2a. 26. b. 9. C $0 $900 $5,100 $6,000 d. 3 4a. b. D 12. E 13. C 14. R 15. E 10. A 17. S 18. E 19. $ 20. 21. 22. 23. 24. 25. C. C. 5. 6. 7. Ba b. Adjusted basis of distributed property Total distributions 10. 11. Adjusted basis at boginning of year. Not less than zero. Enter -0- if first tax year. Cash contributions... Property contributions (adjusted basis less associated liabilities), not less than zero Service contributions at fair market value (if taxed) Total contributions Increased share of or assumption of partnership liabilities Share income or gains (incl. tax-exempt income)(Part II, col a line 21 plus 22) Business interest expense included on 4a ******* Other current year basis decreases (Part II, col b, Ine 23). Prior year suspended other basis decreases (Part II, col c, line 23) 2a. b. C. 4a. Other basis decreases allowed this year (line 22 plus line 23, but not more than line 21) Disallowed other basis decreases this year (line 22 plus line 23 less line 24) Adjusted basis in the partnership at the end of the year (Lino 21 less line 24). Not less than zero b. Subtract line 4b from line 4a. If the result is less than zero, enter zero and carry the amount as positive on line 12 Other basis increases (Part II, col a, line 23) Total increases (Total lines 2d through 5) Adjusted basis before decreasos (line 1 plus line 6) Cash distributions.. Ba 1,000 b. 1,100 Decreased share of partnership liabilities Adjusted basis before additional decreases and expenses (line 7 less lines 8c and 9). Not less than zero Share of the partnership's current year losses and deductions (Part II, col b, line 21) Remaining business interest expense (line 4b less line 4a). Not less than zero Prior year suspended losses (Part II, col c, line 21 plus 24)..... Losses allowed this year (lines 11 through 13, but not more than line 10) Disallowed losses this year (line 11 through 13, less line 13) Adjusted basis before nondeductible expenses & other basis adjustments (in 10 less In 14). Not less than zero Share of the partnership's current year nondeductible expenses (Part II, col b. line 22) Prior year suspended nondeductible expenses (Part II, col c, line 22) Nondeductible expenses allowed this year (line 16 plus line 17, but not more than line 15) Disallowed nondeductible expenses this year (line 17 plus line 18 less line 19) Adjusted basis before other basis adjustments (line 16 less line 19). Not less than zero ******* Keep for Your Records 4,000 1. 2d. 3. 4c. 5. 6. 7. Bc. 9. 10, 11. 12. 13. 14, 15, 10. 17. 18. 19. 20, 21. 22. 23. 24, 25. 26. 1,000 1,100 2,100 6,100 1,000 5,100 6,000 5,100 900 0 0 10 0 0

Answer rating: 100% (QA)

The image displays a scenario involving Clarence Hayess investment in a company along with a partially filled out 2021 Federal Partnership K1 Partners Outside Basis Worksheet The task is to calculate ... View the full answer