Question 1

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?

Accepted Answer

Funnel the loss: Loss -> Basis Filter -> At-Risk Filter -> Passive Filter. Whatever gets through all three is deductible.

Question 2

What mistakes do candidates make on this CPA question?

Accepted Answer

Skipping the Basis or At-Risk steps and going straight to passive income matching.

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?

How to approach this question

Full Answer

Common mistakes

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