Arnold purchased interests in two limited partnerships 6 years ago.During 2018, Arnold had income of $22,000 from one of the partnerships.He had a loss from the other partnership of $32,000, salary income of $35,000, and dividend income of $2,000.What is the amount of net passive losses that Arnold may deduct for 2018?
A)$0
B)$2,000
C)$8,000
D)$10,000
E)None of the above

Question

Quizplus · Accepted Answer

Arnold's net passive losses are $10,000 ($32,000 loss from the partnership minus $22,000 income from the other partnership). However, the passive loss deduction is limited to the amount of passive income, which is $2,000. Therefore, Arnold's net passive losses that he may deduct for 2018 are $2,000.

Arnold Purchased Interests in Two Limited Partnerships 6 Years Ago