Question - At the beginning of the year, Jill's basis in her 40% limited partnership interest was $10,000. During the year, the partnership reported a loss of $90,000 and the partnership obtained a $40,000 recourse loan on some machinery. How much loss may Jill deduct if she has $40,000 of passive income?
1. $10,000
2. $16,000
3. $26,000
4. $36,000
5. None of the above