Question

Larry recently invested $24,400 (tax basis) in purchasing a limited partnership interest in which he will have no management rights in the company. His at-risk amount is also $24,400. In addition, Larry’s share of the limited partnership loss for the year is $3,750, his share of income from a different limited partnership was $2,600, and he has $3,700 of dividend income from the stock he owns. How much of Larry's $3,750 loss from the limited partnership can he deduct in the current year?

Answer 1

Answer:

$2,600.

Explanation:

Considering the available information given the in the question, we have:

Larry’s tax basis is $24,000

His at-risk amount is $24,000.

Consequently, the basis and at-risk hurdles are not considered.

On the other hand, given that Larry still may not deduct $2,600 of the $3,750 loss because he only has $2,600 of passive income for the year.

Hence, Larry has a $2,600 passive activity loss carryover.

Therefore, the Deductible Loss is $2,600.