Sally recently invested $10,000 (tax basis) in a limited partnership interest. Her atrisk amount is also $10,000.
Question:
Sally recently invested $10,000 (tax basis) in a limited partnership interest. Her atrisk amount is also $10,000. The partnership lost $6,000 this year, and Sally’s share of the loss is $2,000. Sally has $40,000 in wage income and $2,000 of dividend income. In addition, Sally’s share of income from a different limited partnership is $1,000. Sally does not meet the tests for material participation for either of her partnership interests. How much of Sally’s $2,000 loss from the limited partnership can she deduct this year?
a. $2,000
b. $0
c. $1,000 because she has $2,000 of dividend income
d. $1,000 because she has $1,000 income from another limited partnership
DividendA dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their... Partnership
A legal form of business operation between two or more individuals who share management and profits. A Written agreement between two or more individuals who join as partners to form and carry on a for-profit business. Among other things, it states...
Step by Step Answer:
South-Western Federal Taxation 2020 Comprehensive
ISBN: 9780357109144
43rd Edition
Authors: David M. Maloney, William A. Raabe, James C. Young, Annette Nellen, William H. Hoffman