Question

Problem 11-49 (LO. 2, 3, 7) A number of years ago, Lee acquired a 20% interest in the BlueSky Partnership for $60,000. The partnership was profitable through 2018, and Lee's amount at risk in the partnership interest was $120,000 at the beginning of 2019. BlueSky incurred a loss of $400,000 in 2019 and reported income of $200,000 in 2020. Assuming that Lee is not a material participant, how much of his loss from BlueSky Partnership is deductible in 2019 and 2020? Consider the at-risk and passive activity loss rules, and assume that Lee owns no other passive investments. If an amount is zero, enter "0". In 2019, Lee's share of BlueSky's loss is $ 80,000 . of this loss, $ 80,000 activity loss rules. In 2020, his amount at-risk is $ 40,000 x . Lee may deduct $ loss rules. This leaves a $ 40,000 suspended loss at the end of 2020. X can be deducted under the passive 40,000 under the passive activity

Answer 1

solution is Lee shape of Blue Sky's loss in 2019 = $ 4000w x207 = $ 80000 passine loss sules Entire loss is suppended under the passive loss - Blue sky's share of the passine income in 2020 = $2001c0 x 20). = $ 40000 Bluesky's at disis amount = $ 120000 $80100 passive income +$40000 share of income donooo =$80000 In 2000, Blue sky's may deduct (noooo of his 8oooo Suspended loss against the passive income.. so, the end of 2020, suspended lossis & 4oooo In 2019, Lee's share of Blue sky's loss is & 80000, of this loss & 40000 can be deducted under the passive activity loss rules. In 2000, this amount at risk is & 80000 ! Lee may deduct & 40000 under the passive hty loss rules. This leaves a $ 40000 suspended loss at the end of 2020