This year, individual X and individual Y formed XY Partnership. X contributed $50,000 cash, and Y contributed business assets with a $50,000 FMV. Y’s adjusted basis in these assets was only $10,000. The partnership agreement provides that income and loss will be divided equally between the two partners. Partnership operations for the year generated a $42,000 loss. How much loss may each partner deduct currently, and what basis will each partner have in her interest at the beginning of next year? Assume the excess business loss limitation does not apply to either X or Y

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Answer

The answer and procedures of the exercise are attached in the following image.

Explanation  

Please consider the data provided by the exercise. If you have any question please write me back. All the exercises are solved in a single sheet with the formulas indications.  

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