A number of years ago, Lee acquired a 20% interest in the BlueSky Partnership for $60,000. The

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A number of years ago, Lee acquired a 20% interest in the BlueSky Partnership for $60,000. The partnership was profitable through 2016, and Lee’s amount at risk in the partnership interest was $120,000 at the beginning of 2017. BlueSky incurred a loss of $400,000 in 2017 and reported income of $200,000 in 2018. Assuming that Lee is not a material participant, how much of his loss from BlueSky Partnership is deductible in 2017 and 2018? Consider the at-risk and passive-activity loss rules, and assume that Lee owns no other passive investments. 

Partnership
A legal form of business operation between two or more individuals who share management and profits. A Written agreement between two or more individuals who join as partners to form and carry on a for-profit business. Among other things, it states...
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South-Western Federal Taxation 2018 Comprehensive

ISBN: 9781337386005

41st Edition

Authors: David M. Maloney, William H. Hoffman, Jr., William A. Raabe, James C. Young

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