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At the beginning of 2018, Ms. P purchased a 15 percent interest in PPY Partnership for...

At the beginning of 2018, Ms. P purchased a 15 percent interest in PPY Partnership for $23,000. Ms. P’s Schedule K-1 reported that her share of PPY’s debt at year-end was $22,000, and her share of ordinary loss was $41,550. On January 1, 2019, Ms. P sold her interest to another partner for $3,000 cash.

How much of her share of PPY’s loss can Ms. P deduct on her 2018 return

Compute Ms. P’s recognized gain on sale of her PPY interest.

How would your answers to parts a and b change if PPY were an S corporation instead of a partnership?

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