Jay Has a Tax Basis of $20,000 in His Partnership

Multiple Choice

Jay has a tax basis of $20,000 in his partnership interest at the beginning of the partnership tax year. The following amounts of partnership debt were allocated to Jay and are included in his beginning-of-the-year tax basis: (1) recourse debt-$9,000, (2) qualified nonrecourse debt-$1,000, and (3) nonrecourse debt-$1,100. There were no changes to the debt allocated to Jay during the tax year. If Jay is allocated a $21,000 loss for the current year, how much of the loss will be suspended under the tax basis and at-risk limitations?

A) $1,100, $1,000
B) $1,000, $1,100
C) $0, $0
D) $20,000, $1,000