Question

Larry recently invested $25,800 (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 $25,800. In addition, Larry’s share of the limited partnership loss for the year is $3,940, his share of income from a different limited partnership was $2,700, and he has $3,900 of dividend income from the stock he owns. How much of Larry's $3,940 loss from the limited partnership can he deduct in the current year?

Answer 1

$2,700

Step-by-step explanation:

The $2,700 would be deducted in the current year as it reflects the share of the income from different limited partnerships.

The invested amount, risk amount, limited partnership loss, dividend income is not be considered for the computation part is we have to find out that amount which is deducted. These items are irrelevant. Hence ignored it .

Larry should be deducted up to its sharing income. So, we consider only $2,700