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Ken Has a $40,000 Loss from an Investment in a Partnership

question 14

Essay

Ken has a $40,000 loss from an investment in a partnership in which he does not materially participate. He paid
$30,000 for his interest. How much of the loss is disallowed by the at-risk rules? How much is disallowed by the passive activity loss rules?


Definitions:

FMVSS 121

United States Federal Motor Vehicle Safety Standard addressing air brake systems, aiming to ensure safety and reliability of braking in commercial vehicles.

Trailer Hand Control

A device installed in towing vehicles for manual control of a trailer’s brakes independently of the vehicle's brakes.

Service Brakes

The primary braking system used in vehicles for normal stopping operations, as opposed to auxiliary systems like parking or emergency brakes.

Foundation Brakes

The braking components downstream from the actuator that mechanically effect braking on a wheel. In a truck S-cam brake assembly, the foundation brakes consist of a slack adjuster, an S-camshaft, brake shoes, and a drum.

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