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16 December, 15:31

Pedro owns a 50% interest in a limited partnership that operates an apartment complex. During the current year, the partnership generates a taxable rental loss of $42,000. Pedro's other sources of income are a salary of $55,000 and an interest of $18,000. How much of the rental loss can Pedro deduct from his other sources of income

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  1. 16 December, 15:35
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    Pedro can deduct $13,000 from his other income sources and his allowable loss is $0

    Explanation:

    Solution

    Recall that:

    Pedro has an interest of 50% in s limited partnership

    In the present year the partnership produces a taxable rental loss of = $42,000

    The other sources of income for Pedro is = $55,000 salary

    Interest rate = $18,000

    The next step to take is to find the rental loss Pedro can deduct from his other sources of income

    Thus,

    We have to subtract his Other sources of income from The rental loss generated which i stated below:

    Other income sources - Rental loss generated

    $55,000 - $42000 = $13,000

    Both note that the loss from the partnership can be adjusted with salary

    So,

    The salary loss can be set out with partnership loss

    Therefore, Pedro can deduct $13,000 from his other income sources and his allowable loss is $0
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