In what order are the loss limitations for partnerships applied?
A) At-Risk Amount - Tax Basis - Passive Activity Loss.
B) Tax Basis - At-Risk Amount - Passive Activity Loss.
C) Passive Activity Loss - Tax Basis - At-Risk Amount.
D) Tax Basis - Passive Activity Loss - At-Risk Amount.

Question

Quizplus · Accepted Answer

The correct order for applying loss limitations for partnerships is Tax Basis, At-Risk Amount, and then Passive Activity Loss. This sequence ensures that losses are first limited by the partner's investment in the partnership, then by the amount they are financially at risk, and finally by passive activity loss rules.

In What Order Are the Loss Limitations for Partnerships Applied