Sue invested $5,000 in the ABC Limited Partnership and received a 10 percent

interest in the partnership. The partnership had $20,000 of qualified nonrecourse debt

and $20,000 of debt she is not responsible to repay because she is a limited partner.

Sue is allocated a 10 percent share of both types of debt. During the year, ABC LP

generated a ($90,000) loss. How much of Sue's loss is disallowed due to her tax basis

or at-risk amount?

A. Zero; all of her loss is allowed to be deducted.

B. $2,000 disallowed because of her at-risk amount.

C. $2,000 disallowed because of her tax basis.

D. $4,000 disallowed because of her tax basis.

E. $4,000 disallowed because of her at-risk amount