The MOP Partnership Is Involved in Construction Activities

The MOP Partnership is involved in construction activities.Patricia has an adjusted basis for her partnership interest on January 1 of the current year of $600,000,consisting of the following: Capital account $350,000 Share of partnership recourse debt 50,000 Share of partnership nonrecourse debt 200,000 $600,000 ​ During the year,the partnership has an operating loss of $1.2 million and distributes $60,000 of cash to Patricia.Partnership liabilities were the same at the end of the tax year,and the nonrecourse debt is not "qualified nonrecourse debt." If she owns a 60% share of partnership profits,capital,and losses,and is an active ("material") participant in the partnership,how much of her share of the operating loss can Patricia deduct? What Code provisions could cause a suspension of the loss? How would your answer change if MOP were an LLC and Patricia had not personally guaranteed any of the debt?

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Patricia can only deduct $340,000 of her...

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