Question

20. Larry recently invested $28,500 (tax basis) in purchasing a limited partnership interest. His at-risk amount is also $28,500. In addition, Larry’s share of the limited partnership loss for the year is $2,425, his share of income from a different limited partnership is $1,170, and he has $3,850 of dividend income from the stock he owns. How much of Larry’s $2,425 loss from the limited partnership can he deduct in the current year?

Answer 1

How much of Larry’s $2,425 loss from the limited partnership can he deduct in the current year?

Answer - Larry can deduct following amount in current year

               = $ 1255 ($2425 - $1170)

The tax basis and at-risk hurdles do not come into effect since the tax basis and at-risk amounts are both $28,500. His passive income is $1,170 so the amount he can deduct for loss is only $1255 (2425-1170).