John, a limited partner of Candy Apple, LP, is allocated $29,500 of ordinary business loss from the partnership. Before the loss allocation, his tax basis is $19,500 and at-risk amount is $9,500. John also has ordinary business income of $19,500 from Sweet Pea, LP as a general partner and ordinary business income of $5,500 from Red Tomato, as a limited partner. How much of the $29,500 loss from Candy Apple can John deduct currently?
Answer
He deduct $5,500.
Explanation
As per the tax law, ordinary loss of a company or a partnership firm can be set off against ordinary income of the company. No other income is used by the company to set off its ordinary income.
Ordinary loss of the company is $29,500. The ordinary income is $5,500. Therefore, only the amount of ordinary income of $5,500 is deducted from the loss of $29,500 and rest of the amount is carry forward to the next year.
John, a limited partner of Candy Apple, LP, is allocated $29,500 of ordinary business loss from...
John, a limited partner of Candy Apple, LP, is allocated $30,000 of ordinary business loss from the partnership. Before the loss allocation, his tax basis is $25,000 and at-risk amount is $22,000. John also has ordinary business income of $20,000 from Sweet Pea, LP as a limited partner and ordinary business income of $5,000 from Red Tomato, as a general partner. How much of the $30,000 loss from Candy Apple can John deduct currently?
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