Abby is a limited partner in a limited partnership. Her basis in the partnership interest is $80,000 with an at-risk basis of $75,000. Abby's share of the partnership loss for the tax year is $90,000. She has other income of $275,000 from her job as a controller.
a.How much of the $90,000 can Abby offset against her other income of $275,000? What happens to any balance that cannot be deducted in the current tax year?
b.Assume instead that Abby is the owner of an interest in an LLC. How much of the $90,000 can Abby offset against her other income of $275,000? What happens to any balance that cannot be deducted in the current year?

Question

Abby is a limited partner in a limited partnership. Her basis in the partnership interest is $80,000 with an at-risk basis of $75,000. Abby's share of the partnership loss for the tax year is $90,000. She has other income of $275,000 from her job as a controller.
a.​How much of the $90,000 can Abby offset against her other income of $275,000? What happens to any balance that cannot be deducted in the current tax year?
b.​​Assume instead that Abby is the owner of an interest in an LLC. How much of the $90,000 can Abby offset against her other income of $275,000? What happens to any balance that cannot be deducted in the current year?

Quizplus · Accepted Answer

The Answer of Abby is a limited partner in a limited partnership. Her basis in the partnership interest is $80,000 with an at-risk basis of $75,000. Abby's share of the partnership loss for the tax year is $90,000. She has other income of $275,000 from her job as a controller.
a.​How much of the $90,000 can Abby offset against her other income of $275,000? What happens to any balance that cannot be deducted in the current tax year?
b.​​Assume instead that Abby is the owner of an interest in an LLC. How much of the $90,000 can Abby offset against her other income of $275,000? What happens to any balance that cannot be deducted in the current year?

Abby Is a Limited Partner in a Limited Partnership