Problem: Module 7 Textbook Problem 9 Learning Objectives: 7-6 Adjust the tax basis in a partnership interest 7-7 Apply the basis limitation on the deduction of partnership losses . 7-9 Identify similarities and differences in the tax treatment of Scorporations versus partnerships At the beginning of Year 1 Ms. Mushroom, an individual, purchased a 15 percent interest in Fungi Partnership for $21,000. Ms. Mushroom's Schedule K-1 reported that her share of Fungi's debt at year-end was $13,000, and her share of ordinary loss was $30,850. On January 1, Year 2, Ms. Mushroom sold her interest to another partner for $2,100 cash. Required: a. How much of her share of Fungi's loss can Ms. Mushroom deduct on her Year 1 tax return? b. Compute Ms. Mushroom's recognized gain on sale of her Fungi Partnership interest. c. How would your answers to parts a and b change if Fungi were an S corporation instead of a partnership? Complete this question by entering your answers in the tabs below. Required A Required B Required C How much of her share of Fungi's loss can Ms. Mushroom deduct on her Year 1 tax return? Deduction Complete this question by entering your answers in the tabs below. Required A Required B Required C Compute Ms. Mushroom's recognized gain on sale of her Fungi Partnership interest. Gain recognized Complete this question by entering your answers in the tabs below. Required A Required B Required C How would your answers to parts a and b change if Fungi were an S corporation instead of a partnership? Amount Deduction Gain recognized