Crystal invested $8,000 cash in CRK Partnership for a 30% general partnership interest.In its first year of operations,CRK lost $15,000.In its second year of operations,CRK lost an additional $14,000.How much of the second year's losses can Crystal deduct?

Question

Quizplus · Accepted Answer

Crystal can deduct losses up to her basis in the partnership. Initially, her basis is $8,000. After the first year's loss, her basis is reduced by her share of the loss: $15,000 * 30% = $4,500, leaving her with a basis of $3,500. In the second year, she can deduct up to her remaining basis of $3,500.

Crystal Invested $8,000 Cash in CRK Partnership for a 30