Arnold purchased interests in two limited partnerships 6 years ago. During 2015, Arnold had income of $22,000 from one of the partnerships. He had a loss from the other partnership of $32,000, salary income of $35,000, and dividend income of $2,000. What is the amount of net passive losses that Arnold may deduct for 2015?

Question

Quizplus · Accepted Answer

The net passive loss is the total passive losses minus the total passive income. Arnold's total passive losses are $32,000, and his total passive income is $22,000. Therefore, his net passive loss is $10,000. However, the maximum amount of net passive loss that Arnold can deduct is $25,000. Since Arnold's net passive loss is less than $25,000, he can deduct the full amount of his net passive loss, which is $10,000.

Arnold Purchased Interests in Two Limited Partnerships 6 Years Ago