René is a partner in the RST Partnership,which is not publicly traded.Her allocable share of RST's passive ordinary losses from a nonrealty activity for the current year is ($60,000).René has a $40,000 adjusted basis (outside basis)for her interest in RST (before deduction of any of the passive losses).Her amount "at risk" under § 465 is $30,000 (before deduction of any of the passive losses).She also has $25,000 of passive income from other sources.How much of her ($60,000)allocable loss can René deduct on her current year's tax return?
A)$25,000.
B)$30,000.
C)$40,000.
D)$60,000.
E)None of the above.

Question

Quizplus · Accepted Answer

René can deduct $25,000 of the passive loss, which is limited to her passive income from other sources. Passive losses can only offset passive income unless there are other exceptions or carryover provisions.

René Is a Partner in the RST Partnership,which Is Not