Abby Is a Limited Partner in a Limited Partnership

question 44

Essay

Abby is a limited partner in a limited partnership.Her basis in the partnership interest is $92,000 with an at-risk basis of $80,000.Abby's share of the partnership loss for the tax year is $100,000.She has other income of $300,000.
a.How much of the $100,000 can Abby offset against her other income of $300,000? What happens to any balance that cannot be deducted in the current tax year?
b.Assume instead that Abby is the owner of an interest in an LLC. How much of the $100,000 can Abby offset against her other income of $300,000? What happens to any balance that cannot be deducted in the current year?

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Definitions:

Fees Earned

Income earned from providing services, recorded as revenue in the income statement.

Correcting Entry

An entry made in accounting records to correct a previous error or adjust for discrepancies.

Journal Entry

A record in accounting that logs a transaction and shows the affected accounts in the form of debits and credits.

Debits

Accounting entries that increase assets or expenses and decrease liabilities, equity, or revenue, recorded on the left side of accounting ledgers.