Question

Molly Grey (single) acquired a 30 percent limited partnership interest in Beau Geste LLP several years ago for $63,000. At the beginning of year 1, Molly has tax basis and an at-risk amount of $22,500. In year 1, Beau Geste incurs a loss of $188,500 and does not make any distributions to the partners.

In year 1, Molly's AGI (excluding any income or loss from Beau Geste) is $64,400. This includes $14,400 of passive income from other passive activities.

In year 2, Beau Geste earns income of $39,500. In addition, Molly contributes an additional $29,050 to Beau Geste during year 2. Molly's AGI in year 2 is $68,600 (excluding any income or loss from Beau Geste). This amount includes $10,880 in income from her other passive investments.

a. Based on the above information, complete the following table:

nitial year 1 amount:
Allowed loss:
End of year 1 at-risk amount
Contribution for year 2
BG Income
Allowed loss:
End of year 2 at-risk amount

Year	Total Loss	At-Risk Allowed	At-Risk Disallowed
1
2

YearAt-Risk AllowedPassive Activity Loss AllowedPassive Activity Loss Disallowed12

b. Based on the above information, complete the following table:

Year 2 AGI:
AGI before Beau Geste:
Year 2 passive income from Beau Geste
Year 2 allowed passive losses
Year 2 AGI

Answer 1

ans a
Initial year 1 amount:	$22,500
Allowed loss: (upto initial year amt)	$22,500
End of year 1 at-risk amount	0
Contribution for year 2 A	$29,050
BG Income (39500*30%) B	11850
Allowed loss: C	$34,050
End of year 2 at-risk amount A+B-C	$6,850
Year	Total Loss	At-Risk Allowed	At-Risk Disallowed
1	56550	$22,500	$34,050
	(188500*30%)
2	34000	34000	0
Year	At-Risk Allowed	Passive actiivty loss allowed	Passive actiivty loss disallowed
1	$22,500	$11,250	$11,250
2	$45,250	26250	$19,000
	34000+11250	(39500*30%)+14400
ans b
Year 2 AGI:
AGI before Beau Geste: E	$68,600
Year 2 passive income from Beau Geste (39500*30%) F	11850
Year 2 allowed passive losses G	26250
Year 2 AGI E+F-G	$54,200