On january 1, x9, gerald received his 50% profits and capital interest in high air, llc in exchange for $2,000 in cash and real property with a $3,000 tax basis secured by a $2,000 nonrecourse mortgage. high air reported a $15,000 loss for its x9 calendar year. how much loss can gerald deduct, and how much loss must he suspend if he only applies the tax basis loss limitation? a. $0, $4,000 b. $0, $7,500 c. $0, $15,000 d. $4,000, $0 e. none of the above

option (E) None of the above

Explanation:

Data provided in the question:

Cash = $2000

Real Property = $3,000

Nonrecourse mortgage = $2,000

Loss reported = $15,000

Now,

Gerald's initial tax basis

= Exchange in cash + Real property with tax basis - Nonrecourse mortgage +(50% of $2000)

= $2,000 + $3,000 - $2,000 + 1,000

= $4,000

and,

Gerald's would be allocated 50% of Loss

= 50% of $15,000

= $7,500

Thus,

Gerald deduction currently is limited to his basis

i.e

Gerald can deduct $4,000

and the remaining  amount

i.e Loss of $3,500 ($7,500 - $4,000) would be suspended and carried forward indefinitely.  

Hence,

the answer is option (E) None of the above

explanation: doctrine of respondeat superior is a legal doctrine that is commonly used in tort. this principle makes an employer or principal legally responsible for the wrongful acts done by an employee or agent, if such acts occur within the scope of the employment or agency.