32 - Page 11-32 32 The at-risk rules limit Fred's...

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Page 11-32 32. The at-risk rules limit Fred’s deductions. He can deduct $35,000 in 2002, and his at-risk amount will be reduced to $15,000 ($50,000 original investment – $35,000 deducted). He will be limited to a $15,000 deduction in 2003 unless he increases his amount at-risk. For example, if Fred invests an additional $10,000 in 2003, his at-risk amount would be $25,000 ($15,000 balance + $10,000 additional investment), and he would be able to deduct the entire $25,000 loss in 2003. Fred’s share of the partnership losses is not subject to the passive loss restrictions because Fred’s interest is not a passive activity. Examples 4 and 5 33. Tilak Kharel 9724 Loudoun Ave Manassas VA 20109 May 28, 2010 Mr. Bill Parker 54 Oak Drive St. Paul, MN 55162 Dear Mr. Parker: This letter is in response to your inquiry regarding the tax treatment of losses that you could expect this year and next year from an investment in Best Choice Partnership. As I understand the facts, you would invest $60,000 in the partnership with the expectation that your share of the partnership losses in the current and succeeding years would be $40,000 and $25,000, respectively.
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