Question

Larry recently invested $24,844 (tax basis) in purchasing a limited partnership interest in which he will have no management rights in the company. His at-risk amount is also $24,844. In addition, Larry’s share of the limited partnership loss for the year is $4,997, his share of income from a different limited partnership was $5,384, and he has $7,904 of dividend income from the stock he owns. What is the amount of adjusted gross income these transactions will generate?

Answer 1

Computation of Adjusted Gross Income of Mr Larry
Gross Income
Income from a different partnership	$      5,384
Less Loss from another partnership	$      4,997
Net income for the year		$          387
Income from dividend		$      7,904
Adjusted Gross Income for the year		$      8,291
Notes: Lary's Tax basis is $24,844 and his at risk amount is also $24,844. Therefore the basis and at risk hurdles do not apply. As he has surplus income, he can adjust the loss of $4997 from his income of $5384 and add the dividend income to arrive at the Adjusted Gross Income of $ 8291
Answer; The amount of Adjusted Gross Incomes these transaction generated is $ 8291