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Partner A is a limited partner in the ABC Partnership. Partner A has a 40% ownership...

Partner A is a limited partner in the ABC Partnership. Partner A has a 40% ownership in all profits and losses of the partnership. Partner A's share of ABC's loss is ($65,000) for the year. Partner A's outside basis in ABC is $50,000 (which includes A share of $15,000 of nonqualified nonrecourse debt). Partner A has passive income from another investment of $25,000 for the year. What amount of ABC's loss can Partner A deduct in the year? What is the amount of loss carry forward at each of the hurdles?

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Answer #1

Since A is a limited partner who has guaranteed a debt to the extent of 15,000 for the partnership, he is not at risk and can claim reimbursement from the partnership for the same.

Partner A's outside basis therefore, does not need to be deducted to the extent of 15,000 for the purpose of setting of the current year losses.

Losses can be set off during the year to the extent of the outside basis of the partner, in this case 50,000..

Amount of loss that can be carried forward is nil.

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