Fred Has a 45 Percent Profits Interest and 30percent Capital

Essay

Fred has a 45 percent profits interest and 30percent capital interest in the SAP Partnership, and his tax basis before considering his share of SAP's current-year loss is $13,000. Included in his tax basis is a $4,600 share of recourse debt and a $7,300 share of nonrecourse debt. Fred is a limited partner in SAP. He is not involved in any other activities. If SAP has a $17,000 ordinary loss for the year, how much of the loss can be deducted currently, and how much of the loss is suspended because of the tax basis, at-risk, and passive activity loss limitations?