Problem
According to 2022 tax year
Taxpayer invested $5,400 in the ABC Limited Partnership and received a 10 percent interest in the partnership. The partnership had $20,800 of debt Taxpayer is not responsible to repay because she is a limited partner. Taxpayer is allocated a 10 percent share of the debt, resulting in a tax basis of $7,480 and an at-risk amount of $5,400. During the year, ABC LP generated a ($74,800) loss. How much of Taxpayer's loss is disallowed due to her tax basis or at-risk amount?
Taxpayer invested $5,400 in the ABC Limited Partnership and received a 10 percent interest in the partnership. The partnership had $20,800 of debt Taxpayer is not responsible to repay because she is a limited partner. Taxpayer is allocated a 10 percent share of the debt, resulting in a tax basis of $7,480 and an at-risk amount of $5,400. During the year, ABC LP generated a ($74,800) loss. How much of Taxpayer's loss is disallowed due to her tax basis or at-risk amount?