Ronald invested $300,000 for a 30% interest in real estate limited partnership. In addition to the initial partner funding, the partnership secures a recourse bank loan of $5 million to purchase a commercial building. During year one, the partnership incurred $7 million in losses. How much of the loss is suspended under the at risk rules?

• A.

  The loss suspended because of the at-risk rules is $300,000 and the loss suspended because of the passive activity loss rules is $0.

• B.

  The loss suspended because of the at-risk rules is $1,800,000 and the loss suspended because of the passive activity loss rules is $2,100,000.

• C.

  The loss suspended because of the at-risk rules is $300,000 and the loss suspended because of the passive activity loss rules is $1,800,000.

• D.

  The loss suspended because of the at-risk rules is $2,100,000 and the loss suspended because of the passive activity loss rules is $1,800,000.