|Posted: 18 Jul 2008 at 14:07 | IP Logged
|becker chapter 4
At-risk limitation provisions of the IRC may limit
i. A partners deduction for his share of partnership losses
ii. A partnership's net operation loss carryover
answer is "a"..reason being a partner's tax deduction for his share of partnership losses is limited to his basis. Any unused loss can be carried forward until basis become available.
ok i buy that answer, but how now in this another question from same chapter contradicts the answer given before..here it goes
Q179. which of the following limitations apply in determining a partner's deduction for that partner share of partnership losses?
At-rsik Passive loss
a) yes no
b) no yes
c) yes yes
answer is surprisingly "c"...how come ?????
NOL and Passive Activity NL are TWO very different things. Passive losses are deductible only against passive activity income. So, if the partnership had any PA Income the PAL would be "deducted" against that. So PAL matters.
At Risk is your Capital Account + % of liablilities YOU (that partner) are responsible for. You may NOT deduct in excess of whatever that amount may be, no matter how much your actual share of partnership loss may have been. So they both limit deductibily.
NOL (regular activity income NOT PASSIVE) is free to move about in previous years and future years to be offset against ANYTHING.. regular operating income, passive activity income, capital gains.. anything. the only limitation is the time period. i belive it is carried back 2 years and carry forward 20 years- though off the top of my head i can not say right now.
BEC APRIL/2nd-2008 -- 87
AUD MAY/23rd-2008 -- 81
REG JULY/15th-2008 -- 76
FARE OCT 10th-2008 -- Studying!