In Year 1, a taxpayer invests $50,000 cash in a partnership and signs a $40,000 nonrecourse note (secured only by the partnership interest, not qualified nonrecourse financing). The partnership allocates a $70,000 loss to the taxpayer. The taxpayer has no passive income. How much loss is suspended under the At-Risk rules specifically?

IRC §465. At-Risk amount = Cash contributed ($50,000). The nonrecourse debt is not qualified nonrecourse financing (real estate), so it adds to basis but not at-risk amount. Total Loss = $70,000. Allowed by At-Risk = $50,000. Suspended by At-Risk = $20,000. (Note: The $50,000 allowed by At-Risk will likely be suspended by Passive Activity rules, but the question asks specifically about At-Risk suspension).