In 2006, Arnold invests $80,000 for a 20% interest in a partnership in which he

Question

In 2006, Arnold invests $80,000 for a 20% interest in a partnership in which he is a material participant. The partnership incurs a loss, and Arnold's share is $100,000. Which of the following statements is false?
     a.     Since Arnold has only $80,000 of capital at risk, he cannot deduct more than $80,000 against his other income.
     b.     Arnold's nondeductible loss of $20,000 can be carried over and used in the future when the at-risk provisions allow.
     c.          If Arnold has taxable income of $40,000 from the partnership in 2005 and there are no other transactions that affect his at-risk amount, he can use all of the $20,000 loss carried over from 2006.
     d.          Arnold's $100,000 loss is nondeductible in 2006 and 2005 under the passive loss provisions.

Explanation / Answer

In 2006, Arnold invests $80,000 for a 20% interest in a partnership in which he is a material participant. The partnership incurs a loss, and Arnold's share is $100,000. Which of the following statements is false?

answer is

d.          Arnold's $100,000 loss is nondeductible in 2006 and 2005 under the passive loss provisions.

Related Questions

Navigate

• Browse (All)
• Browse I
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.