Carter's share of a partnership's operating loss is $17,200. His tax basis in his partnership interest before any adjustment for this loss is $26,000. If Carter has no excess business loss, he may deduct the full partnership loss on his individual tax return.

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Since Carter's tax basis in his partnership interest exceeds his share of the operating loss, he may deduct the full amount of the loss on his individual tax return. Excess business loss limitations only come into play when the taxpayer's losses exceed their total tax basis in the partnership.

Carter's Share of a Partnership's Operating Loss Is $17,200