If the basis of a partnership interest is exhausted,a partner cannot use loans made to the partnership to absorb excess losses.

Question

Quizplus · Accepted Answer

When the basis of a partnership interest is exhausted, a partner cannot use loans made to the partnership to absorb excess losses because the loans are considered to be outside basis and cannot be used to increase the partner's basis. This means the partner would be unable to claim additional losses and may have to carry them forward to future years.

If the Basis of a Partnership Interest Is Exhausted,a Partner