This year T sold his interest in Century Properties, a limited partnership, for a gain of $40,000.At the time of the sale, T had suspended losses attributable to Century of $25,000.For the year, T also had a $32,000 loss from Mervin Gardens, another limited partnership interest.T will carry over the entire $32,000 loss from Mervin Gardens to the following year.

Question

Quizplus · Accepted Answer

T can use the $25,000 of suspended losses from Century Properties to offset the gain from the sale of that interest, reducing the taxable gain to $15,000. The remaining $32,000 loss from Mervin Gardens can then be used to offset the $15,000 gain, leaving T with a $17,000 loss ($32,000 - $15,000) to carry over to the following year, not the entire $32,000.

This Year T Sold His Interest in Century Properties, a Limited