On the first day of the partnership’s tax year, James purcha…
On the first day of the partnership’s tax year, James purchases a 40% interest in Madison Partnership for $30,000 cash. The partnership has $40,000 in liabilities when James enters the partnership. Partners share the risk of loss from liabilities in the same way they share partnership income and losses. During 2025, the partnership incurs a $150,000 loss and a $20,000 increase in liabilities. How much of the loss can James report on his tax return for 2025?