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

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 to the partner's investment in the partnership, then to the amount they are at risk, and finally by passive activity loss rules.

In What Order Are the Loss Limitations for Partnerships Applied