The Langston Real Estate Limited Partnership (Langston) was formed on January 1, 2022, to purchase, construct, and manage residential real estate. The partnership adopted the accrual method of accounting and a calendar year for federal income tax purposes. On February 2, 2022, Langston purchased the Grand West Estate apartment complex for a total price of $5,000,000. Of the purchase price, $1,000,000 was allocated to the land, and $4,000,000 was allocated to the buildings. Langston financed the acquisition by obtaining a fifteen-year, three percent interest rate, $4,500,000 mortgage from a lender that is unrelated to any of the Langston partners. The mortgage is secured by the apartment complex, but it is fully recourse to the partnership. No other properties were purchased during the year. The Langston partnership agreement provides that the corporate general partner, Beach Comber Properties Inc (Beach Comber), will receive an annual management fee equal to 5 percent of the gross rental income earned by the partnership. This fee is reasonable by local industry standards. In return for the fee, Beach Comber will provideall necessary services, so that Langston need not hire any partnership employees. All partnership taxable income, gain, or loss will be allocated 5 percent to Beach Comber and 95 percent to the limited partners, based oneach limited partner's specified percentage interest. The partnership agreement provides that partners' capital accounts will be determined and maintained in accordance with the 704(b) regulations, and that liquidating distributions will be made in accordance with capital account balances. As the general partner, Beach Comber must restore any deficit balance in its capital account upon liquidation; limited partners are not subject to this deficit restoration requirement. However, the partnership agreement does contain a "qualified income offset" to satisfy the alternate test for economic effect.1 On January 20, 2022, our client Nancy Nelson contributed undeveloped land, known as Coastal, and various intangible assets such as goodwill associated with her reputation, to Langston in exchange for a 38 percent limited partnership interest (i.e., Nancy will receive 40 percent of the 95 percent allocations to the limited partners). Beach Comber, as general partner, agreed to this exchange because the land is situated ideally for future development as residential rental property. Nancy inherited Coastal a number of years ago, and her tax basis in the property is $50,000; the appraised value of the landat the date of contribution was $75,000, and the entry to Nancy's partnership capital account properly reflected this contributed value. The partnership agreement provides that limited partners cannot be called upon to make mandatory additional capital contributions in the future

Nancy Nelson is a plastic surgeon employed by a medical professional corporation. During 2022, she received a salary of $330,000 for her medical services. She also earned $19,400 of dividend and capital gain income from her mutual funds, and an allocation of $20,600 of operating business income from an oil and gas partnership in which she has a 0.3 percent limited partnership interest.

A summary of Langstons operating revenues and expenses for 2022 is below: Langston Real Estate Limited Partnership Operating Revenues and Expenses For January 1 December 31, 2022 Gross rental revenues $ 2,100,000 Operating expenses for properties $ 1,700,000 Repairs and maintenance 212,000 Interest expense 126,000 Property taxes 110,000 2,148,000 Net cash flow from operations * $ (48,000) *Langston financed the negative cash flow from operations with short term recourse borrowing. The management fee is not included in the above expense.

Apply the rules of IRC 465 and 469 to compute Nancy Nelsons deduction for her allocated loss.