11-49 A number of years ago, Lee acquired a 20% interest in the BlueSky Part- nership for $60,000. The partnership was profitable through 2016, and Lees amount at risk in the partnership interest was $120,000 at the beginning of 2017. BlueSky incurred a loss of $400,000 in 2017 and reported income of $200,000 in 2018. Assuming that Lee is not a material participant, how much of his loss from BlueSky Partnership is deductible in 2017 and 2018? Consider the at-risk and passive activity loss rules, and assume that Lee owns no other passive investments.

	2017	2018
Beginning at Risk Balance
Investment in Partnership
Less Share of Loss
Ending at risk
Deduction allowed