Problem 4-11 (Algorithmic)

Passive Loss Limitations (LO 4.8)

Walter, a single taxpayer, purchased a limited partnership interest in a tax shelter in 1992. He also acquired a rental house in 2018, which he actively manages. During 2018, Walter's share of the partnership's losses was $23,500, and his rental house generated $29,000 in losses. Walter's modified adjusted gross income before passive losses is $139,500.

If an amount is zero, enter "0".

a.Calculate the amount of Walter's allowable deduction for rental house activities for 2018.

$

b.Calculate the amount of Walter's allowable deduction for the partnership losses for 2018.

$

c.What may be done with the unused losses, if anything?

The unused losses may be carried

tax years to reduce

income in those years.