Christina is a partner in the Fence Partnership, which is not publicly traded. H

Question

Christina is a partner in the Fence Partnership, which is not publicly traded. Her allocable share of Fence's passive ordinary losses from a nonrealty activity for the current year is ($200,000). Christina has a $140,000 adjusted basis (outside basis) for her interest in Fence (before deduction of any of the passive losses). Her amount at risk under § 465 is $110,000 (before deduction of any of the passive losses). She also has $75,000 of passive income from other sources. How much of the $200,000 passive loss allocated to her can Christina deduct on her current year's tax return? Christina is a partner in the Fence Partnership, which is not publicly traded. Her allocable share of Fence's passive ordinary losses from a nonrealty activity for the current year is ($200,000). Christina has a $140,000 adjusted basis (outside basis) for her interest in Fence (before deduction of any of the passive losses). Her amount at risk under § 465 is $110,000 (before deduction of any of the passive losses). She also has $75,000 of passive income from other sources. How much of the $200,000 passive loss allocated to her can Christina deduct on her current year's tax return?

A.   $75,000

B. $110,000
C.   $140,000
D.    $200,000

Explanation / Answer

Correct answer A.

Limitation Code Amount Loss Deductible Suspended Section Available Basis 704 (d) 140000 200000 140000 60000 At-Risk 465 110000 140000 110000 30000 Passive Loss 469 125000 110000 125000 -15000 Amount deductable 75000

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