Question

Pedro owns a 50% interest in a limited partnership that operates an apartment complex. During the current year, the partnership generates a taxable rental loss of $42,000. Pedro's other sources of income are a salary of $55,000 and an interest of $18,000. How much of the rental loss can Pedro deduct from his other sources of income

Answer 1

Pedro can deduct $13,000 from his other income sources and his allowable loss is $0

Step-by-step explanation:

Solution

Recall that:

Pedro has an interest of 50% in s limited partnership

In the present year the partnership produces a taxable rental loss of =$42,000

The other sources of income for Pedro is = $55,000 salary

Interest rate = $18,000

The next step to take is to find the rental loss Pedro can deduct from his other sources of income

Thus,

We have to subtract his Other sources of income from The rental loss generated which i stated below:

Other income sources - Rental loss generated

$55,000 - $42000 = $13,000

Both note that the loss from the partnership can be adjusted with salary

So,

The salary loss can be set out with partnership loss

Therefore, Pedro can deduct $13,000 from his other income sources and his allowable loss is $0