1In 2017, Arnold invests $80,000 for a 20% interest in a partnership in which he is a...
Question:
1In 2017, Arnold invests $80,000 for a 20% interest in a partnership in which he is a material participant. The partnership incurs a loss with $100,000 being Arnold’s share. Which of the following statements is incorrect?
A All of these statements are correct.
B Arnold’s nondeductible loss of $20,000 can be carried over and used in future years (subject to the at-risk provisions).
C Since Arnold has only $80,000 of capital at risk, he cannot deduct any more than this amount against his other income.
D Arnold’s $100,000 loss is nondeductible in 2017 and 2018 under the passive activity loss provisions.
E If Arnold has taxable income of $40,000 from the partnership in 2018 and there are no other transactions that affect his at-risk amount, he can use all of the $20,000 loss carried over from 2017.
Auditing and Assurance services an integrated approach
ISBN: 978-0133125689
15th edition
Authors: Alvin a. arens, Randal j. elder, Mark s. Beasley