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17. Explain the limitation on the destructibility of partnership losses by a partner. Attach Internal Revenue...

17. Explain the limitation on the destructibility of partnership losses by a partner. Attach Internal Revenue Code Section

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Answer #1

Internal Revenue Code (IRC) section 704(d) describes the limitations of losses.

A partner's distributive share of partnership loss(including capital loss) shall be allowed only to the extent of the adjusted basis of such partner's interest in the partnership at the end of the partnership year in which such loss occurred.

Additional information : - Any excess of such loss over such basis shall be allowed as a deduction at the end of the partnership year in which such excess is repaid to the partnership.

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