Question

1. Rubio recently invested $20,000 (tax basis) in purchasing a limited partnership interest. His at-risk amount is $15,000. In addition, Rubio’s share of the limited partnership loss for the year is $22,000, his share of income from a different limited partnership was $6,000, and he had $40,000 in wage income and $10,000 in long-term capital gains. How much of Rubio’s $22,000 loss from the limited partnership can he deduct in the current year considering all limitations?

2. Anwar owns a rental home and is involved in maintaining it and approving renters. During the year he has a net loss of $8,000 from renting the home. His other sources of income during the year were a salary of $111,000 and $30,000 of long-term capital gains. How much of Anwar’s $8,000 rental loss can he deduct currently if he has no sources of passive income? (Enter your answer as a positive)

Answer 1

1)

After applying the tax basis and at-risk limitations, Rubio can potentially deduct $15,000 of loss because Rubio is a limited partner this loss is considered a passive loss.A loss arising from a passive activity is deductible against the net income of another passive activity so, Rubio may only deduct this loss in the current year to the extent he has passive income.Rubio has only passive income of $5,000 from another limited partnership, he may only deduct $5,000 of the $15,000 loss leaving him with a $10,000 passive activity loss that can be carried forward indefinitely and are allowed as deductions against passive income in subsequent years.