ExpertHard1 markMultiple Choice
CPA · Question 55 · Area 4: Entity Taxation
A partner has a ,000 passive loss from a partnership. Their outside basis is ,000. Their at-risk amount is ,000. They have ,000 of passive income from another source. How much of the loss is deductible in the current year?
A partner has a ,000 passive loss from a partnership. Their outside basis is ,000. Their at-risk amount is ,000. They have ,000 of passive income from another source. How much of the loss is deductible in the current year?
Answer options:
A.
,000
B.
,000
C.
,000
D.
,000
How to approach this question
Funnel the loss: Loss -> Basis Filter -> At-Risk Filter -> Passive Filter. Whatever gets through all three is deductible.
Full Answer
B.,000✓ Correct
Loss is limited to Basis (,000). Then limited to At-Risk (,000). Then limited to Passive Income (,000). Deductible amount is ,000.
Common mistakes
Skipping the Basis or At-Risk steps and going straight to passive income matching.
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