Hi, I am doing the problem below and having the solution by myself. However, I am not sure about "Distribution received of $1000 from ABC limited partnership" should include in Maximum Loss Deductible of $ 4,000 to become $3,000 or not.

Please help to answer.

Thanks

1/ During the year, Janice invested $15,000 (tax basis and at-risk basis) into XYZ limited partnership (a passive investment). Her share of the limited partnership income for the year was $6,000, and Janice received an $8,000 distribution from XYZ limited partnership. 2/ During the year, Janice also invested $4,000 (tax basis and at-risk basis) into ABC limited partnership (a passive investment). Her share of the limited partnership loss for the year was $6,000, and Janice received a $1,000 distribution from ABC limited partnership.

This is my solution:

	XYZ limited partnership	ABC limited partnership
Investment made (tax basis and at-risk basis)	$15,000	$4,000
Share of Income/Loss	$6,000	-$6,000
Distribution received	$8,000	$1,000
Taxable Income	$6,000
Maximum Loss deductible		-$4,000	Since, at risk and tax basic is lower than the share of losses, as per passive activity loss limitation rules, loss deductible is restricted only upto tax basis at risk amount ie. 4000. Balance loss of $2,000 can be carried forward indefinitely.
Net Taxable Income of Passive Activity		$2,000	Loss of $4,000 is offset against passive activity income of $6,000. So, net taxable passive activity income is $2,000