Purchase Solution

Limited Partnership Losses

Not what you're looking for?

Ask Custom Question

The problem to be solved:

***Becky, a single taxpayer, acquired a rental house in 2000. The rental house, which Becky actively manages, generated a $15,000 loss in 2012. In addition, Becky owns a limited partnership interest which she acquired in 2005. Her share of the partnership loss for 2012 is $10,000. Becky has modified AGI, before the rental loss and partnership loss, of $130,000. What is the amount of these losses that Becky may deduct in 2012?***

"I'm not sure how to treat the partnership loss. I think that the partnership loss may be disallowed, but not sure. I know that under the passive loss rules, individual taxpayers may deduct up to $25,000 of rental property losses against other income, if they are actively involved in the management of the property and if their AGI doesn't exceed $100,000, which if it does exceed this limit, then the $25,000 is phased out and reduced by $.50 for each $1.00 the taxpayer's modified AGI exceeds the limit.

The rental property loss would be calculated as: $25,000 - (50% of $30,000) = $10,000.
So the $25,000 special deduction is reduced by $10,000 resulting in a $15,000 deduction for the rental property loss. Next, I would say that the amount of these losses Becky may deduct in 2012 is $15,000.
Unless, I am to treat each type of loss separately? However, based on my textbook and internet research, I have been unable to locate any info stating that limited partnership losses are subject to the same $25,000 special deduction and AGI limits. Help!!!

Purchase this Solution

Solution Summary

This solution shows the student how to calculate the amount that Becky can deduct in 2012 for her loss on the limited partnership interest that she owns. Additional resources are provided for student expansion on this partnership income tax topic.

Solution Preview

You're on the right track.

Becky can deduct the lesser of the partnership loss, which was $15,000 or the following, which you already calculated:

*Note that the $100,000 is the phaseout.)

25,000 - (130,000 - 100,000) ...

Purchase this Solution

Free BrainMass Quizzes
Managing the Older Worker

This quiz will let you know some of the basics of dealing with older workers. This is increasingly important for managers and human resource workers as many countries are facing an increase in older people in the workforce

Income Streams

In our ever changing world, developing secondary income streams is becoming more important. This quiz provides a brief overview of income sources.

Business Processes

This quiz is intended to help business students better understand business processes, including those related to manufacturing and marketing. The questions focus on terms used to describe business processes and marketing activities.

Six Sigma for Process Improvement

A high level understanding of Six Sigma and what it is all about. This just gives you a glimpse of Six Sigma which entails more in-depth knowledge of processes and techniques.

Situational Leadership

This quiz will help you better understand Situational Leadership and its theories.