Rebecca is a partner in the RST Partnership, which is not publicly traded. Her allocable share of RST's passive ordinary losses from a nonrealty activity for the current year is ($60,000). Rebecca has a $40,000 adjusted basis (outside basis) for her interest in RST (before deduction of any of the passive losses). Her amount "at risk" under § 465 is $30,000 (before deduction of any of the passive losses). She also has $25,000 of passive income from other sources. How much of her ($60,000) allocable loss can Rebecca deduct on her current year's tax return?
A) $25,000.
B) $30,000.
C) $40,000.
D) $60,000.
E) None of the above.

Question

Quizplus · Accepted Answer

Rebecca can deduct $25,000 of her passive losses because she has $25,000 of passive income from other sources, which allows her to offset the passive losses up to that amount.

Rebecca Is a Partner in the RST Partnership, Which Is