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What is each partner deductible share of the loss

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Problem 1: L, M, and N formed an equal general partnership in January of the current year, each contributing $1,000 cash and each actively participating in the business. Although the partnership is engaged in real estate rental activities, it does not qualify as a real property trade or business. The partnership uses the cash method of accounting. The partnership purchased real property for $100,000, paying $3,000 in cash and giving a $97,000 nonrecourse note for which none of the pa ners is personally liable and which is not qualified real estate nonrecourse financing. The partnership incurred an operating loss of $15,000 for the year. Each partner has adjusted gross income from other activities of approximately $75,000 and no other passive losses. What is each pa ner's deductible share of the loss?

A. $0
B. $1,000
C. $4,000
D. $5,000

Reference no: EM132688870

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