Please help me fill in the missing blank. Problem 11-49 (LO. 2, 3,7) A number of

Question

Please help me fill in the missing blank.

Problem 11-49 (LO. 2, 3,7) A number of years ago, Lee acquired a 20% interest in the BlueSky Partnership for $60,000. The partnership was profitable through 2016, and Lee's amount at risk in the partnership interest was $120,000 at the beginning of 2017. BlueSky incurred a loss of $400,000 in 2017 and reported income of $200,000 in 2018. Assuming that Lee is not a material participant, how much of his loss from BlueSky Partnership is deductible in 2017 and 2018? Consider the at-risk and passive activity loss rules, and assume that Lee owns no other passive investments. If an amount is zero, enter "O". In 2017, Lee's share of BlueSky's loss is $ 80,000 Of this loss, $ can be deducted under the passive activity loss rules. In 2018, his at-risk is 80,000 Lee may deduct 40,000 under the passive activity loss rules. This leaves a $ 40,000 suspended loss at the end of 2018.

Explanation / Answer

The loss cannot be deducted under passive activity loss rules in 2017 since Lee is not a material or active partcipant.

The loss that can be deducted under the passive activity loss rules is $0. The entire loss of $80000 in 2017 will be deducted under the at-risk rules.

Ans is $0.

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