Rebecca is a limited partner in the RST Partnership, which is not publicly traded. Her allocable share of RST's passive ordinary losses from a nonrealty activity for the current year is ($60,000). Rebecca has a $40,000 adjusted basis (outside basis) for her interest in RST (before deduction of any of the passive losses). Her amount "at risk" is $30,000 (before deduction of any of the passive losses). She also has $25,000 of passive income from other sources. She has no business losses for the year from other sources. How much of her ($60,000) allocable RST loss can Rebecca deduct on her current-year tax return?

Question

Quizplus · Accepted Answer

Rebecca can deduct up to $25,000 of her allocable RST loss against her passive income from other sources. The amount she can deduct is limited to her passive income amount because her at-risk amount ($30,000) and adjusted basis ($40,000) do not limit her further, given she has only $25,000 of passive income to offset.

Rebecca Is a Limited Partner in the RST Partnership, Which