Priya is a partner in a partnership.The partnership has incurred a loss for the year.Priya's ability to recognize the loss will be tested in the following order:

Question

Quizplus · Accepted Answer

The order in which a partner can recognize a loss in a partnership is determined by the basis limitations and the passive and excess business loss limitations. The basis limitations are calculated first, followed by the passive loss limitations, and then the excess business loss limitations. Therefore, Priya's ability to recognize the loss will be tested in the following order: (1) basis limitations, (2) passive loss limitations, and (3) excess business loss limitations. Choice B is the best choice as it follows this order correctly.

Priya Is a Partner in a Partnership