In 2016, Kelly Earns a Salary of $200,000 and Invests

question 28

Essay

In 2016, Kelly earns a salary of $200,000 and invests $40,000 for a 20% interest in a partnership not subject to the passive activity loss rules. Through the use of $800,000 of nonrecourse financing, the partnership acquires assets worth $1 million. The activity produces a loss of $150,000, of which Kelly's share is $30,000. In 2017, Kelly's share of the loss from the partnership is $15,000. How much of the loss from the partnership can Kelly deduct?

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