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Comprehensive Problem 20-81 (LO 20-1, LO 20-2, LO 20-3, LO 20-4, LO 20-5, LO 20-6) (Algo) Skip to question [The following information applies to the questions displayed below.]

The TimpRiders LP has operated a motorcycle dealership for a number of years. Amir is the limited partner, Francesca is the general partner, and they share capital and profits equally. Francesca works full time managing the partnership. Both the partnership and the partners report on a calendar-year basis. At the start of the current year, Amir and Francesca had basis of $11,200 and $3,800, respectively, and the partnership did not have any liabilities. During the current year, the partnership reported the following results from operations:

Net sales $ 675,000

Cost of goods sold 508,000

Operating expenses 180,000

Short-term capital loss 3,400

Tax-exempt interest 2,800

1231 gain 6,800

On the last day of the year, the partnership distributed $3,800 each to Amir and Francesca. Comprehensive Problem 20-81 Part 1 (Algo) Required:

a. What outside basis do Amir and Francesca have in their partnership interests at the end of the year?

b. How much of their losses are currently not deductible by Amir and Francesca because of the tax-basis limitation?

c. To what extent does the passive activity loss limitation apply in restricting their deductible losses for the year? Note: For all the requirements, negative amounts should be entered with a minus sign. Leave no answers blank. Enter zero if applicable.

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