Clint Noticed That the Schedule K-1 He Just Received from ABC

question 119

Essay

Clint noticed that the Schedule K-1 he just received from ABC Partnership included a $19,800 ordinary business loss allocation. His tax basis in ABC at the beginning of ABC's most recent tax year was $9,800. Comparing the Schedule K-1 he recently received from ABC with the Schedule K-1 he received from ABC last year, Clint noted that his share of ABC partnership debt changed as follows: recourse debt increased from $0 to $1,800, qualified nonrecourse debt increased from $0 to $2,800, and nonrecourse debt increased from $0 to $2,800. Finally, the Schedule K-1 Clint recently received from ABC reflected a $800 cash contribution he made to ABC during the year.
Clint is not a material participant in ABC Partnership, and he received $9,800 of passive income from another investment during the same year he received the loss allocation from ABC. How much of the $19,800 loss from ABC can Clint deduct currently, and how much of the loss is suspended because of the tax basis, at-risk, and passive activity loss limitations?

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Definitions:

Marginal Utility

The additional satisfaction or utility a consumer receives from consuming one more unit of a good or service.

Marginal Utility

Marginal utility represents the additional satisfaction or utility a consumer gains from consuming one more unit of a good or service.

Total Utility

The sum satisfaction or benefit that a consumer receives from consuming a particular quantity of goods or services.

Consumer Surplus

The variance between the aggregate sum consumers are prepared and able to spend on a good or service versus what they truly pay.