Question

Sue invested $15,000 in the ABC Limited Partnership and received a 10 percent interest in the partnership. The partnership had $40,000 of qualified nonrecourse debt and $40,000 of debt she is not responsible to repay because she is a limited partner. Sue is allocated a 10 percent share of both types of debt, resulting in a tax basis of $23,000 and an at-risk amount of $19,000. During the year, ABC LP generated a ($230,000) loss. How much of Sue's loss is disallowed due to her tax basis or at-risk amount? Zero; all of her loss is allowed to be deducted. $3,400 disallowed because of her at-risk amount. $4,800 disallowed because of her tax basis. $6,800 disallowed because of her tax basis. $6,800 disallowed because of her at-risk amount.

          Sue invested $15,000 in the ABC Limited Partnership and received a 10 percent interest in the partnership. The partnership had $40,000 of qualified nonrecourse debt and $40,000 of debt she is not responsible to repay because she is a limited partner. Sue is allocated a 10 percent share of both types of debt, resulting in a tax basis of $23,000 and an at-risk amount of $19,000. During the year, ABC LP generated a ($230,000) loss. How much of Sue's loss is disallowed due to her tax basis or at-risk amount? Zero; all of her loss is allowed to be deducted. $3,400 disallowed because of her at-risk amount. $4,800 disallowed because of her tax basis. $6,800 disallowed because of her tax basis. $6,800 disallowed because of her at-risk amount.

Added by Alfonso S.

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