Reference no: EM132608414

Question - Clint noticed that the Schedule K-1 he just received from ABC Partnership included a $19,600 ordinary business loss allocation. His tax basis in ABC at the beginning of ABC's most recent tax year was $9,600. Comparing the Schedule K-1 he recently received from ABC with the Schedule K-1 he received from ABC last year, Clint noted that his share of ABC partnership debt changed as follows: recourse debt increased from $0 to $1,600, qualified nonrecourse debt increased from $0 to $2,600, and nonrecourse debt increased from $0 to $2,600. Finally, the Schedule K-1 Clint recently received from ABC reflected a $600 cash contribution he made to ABC during the year.

Clint is not a material participant in ABC Partnership, and he received $9,600 of passive income from another investment during the same year he received the loss allocation from ABC. How much of the $19,600 loss from ABC can Clint deduct currently, and how much of the loss is suspended because of the tax basis, at-risk, and passive activity loss limitations?