Question

Rubio recently invested $20,500 (tax basis) in purchasing a limited partnership interest in which he will have no management rights in the company. his at-risk amount is $15,350. in addition, rubio's share of the limited partnership loss for the year is $22,650, his share of income from a different limited partnership is $5,075, and he has $40,500 in wage income and $10,250 in long-term capital gains. c. how much of rubio's $22,650 loss from the limited partnership can he deduct in the current year considering all limitations?

A. $0 (cannot deduct any of the loss)
B. $15,350 (limited to the at-risk amount)
C. $20,500 (limited to the amount invested)
D. $22,650 (can deduct the full loss)

Answer 1

Rubio can deduct $15,350 of his $22,650 loss from the limited partnership, which is limited to his at-risk amount.

Step-by-step explanation:

The question pertains to the deductibility of a loss from a limited partnership interest considering tax basis and at-risk limitations. Rubio invested $20,500 in a limited partnership and has an at-risk amount of $15,350. Given Rubio's share of the limited partnership loss for the year is $22,650, the deduction of this loss is limited to the at-risk amount, which is the amount he can actually stand to lose in the investment. Therefore, the correct answer is B. $15,350, limited to the at-risk amount. Any loss beyond the at-risk amount is not currently deductible.