Problem 4-11 (Algorithmic) Passive Loss Limitations (LO 4.8)

Walter, a single taxpayer, purchased a limited partnership interest in a tax shelter in 1992. He also acquired a rental house in 2018, which he actively manages. During 2018, Walter's share of the partnership's losses was $17,500, and his rental house generated $38,000 in losses. Walter's modified adjusted gross income before passive losses is $130,500.

If an amount is zero, enter "0".

a. Calculate the amount of Walter's allowable deduction for rental house activities for 2018. $

b. Calculate the amount of Walter's allowable deduction for the partnership losses for 2018. $

c. What may be done with the unused losses, if anything?

The unused losses may be carried tax years to reduce income in those years.