What are the results of the sale of her interest

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In year 1, Sally invested $45,000 for a 10 percent interest in a limited partnership. This is Sally's only passive investment. The limited partnership has $100,000 of nonrecourse debt (The debt is not secured by real property.) At the end of years 1 through 5, the partnership passed income and losses through to Sally as follows:

Year

Income (Loss)

1

($31,000)

2

($21,000)

3

$4,000

4

$8,000

5

($22,000)

At the beginning of year 6, Sally sells her interest in the partnership for $40,000. For each of the years, determine Sally's deductible and nondeductible (suspended) losses. Explain the reason for the nondeductibility of any losses. What are the results of the sale of her interest?

Reference no: EM13539864

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