When determining whether a limited partnership loss is deductible,a taxpayer must first:
A)Apply only the at-risk rules.
B)Apply the passive activity loss rules and then the at-risk rules.
C)Apply only the passive activity loss rules.
D)Apply the at-risk rules and then the passive activity loss rules.

Question

Quizplus · Accepted Answer

To determine the deductibility of a limited partnership loss, the taxpayer must first apply the at-risk rules, which limit the amount of loss that can be claimed to the taxpayer's amount at risk in the partnership. After applying the at-risk rules, the taxpayer must then apply the passive activity loss rules, which limit the amount of loss that can be claimed for passive activities, such as investments in limited partnerships. Therefore, option D is the correct choice as it follows the correct order of applying the at-risk rule and then passive activity loss rules.

When Determining Whether a Limited Partnership Loss Is Deductible,a Taxpayer