[Anonymous]

Does anyone know why/if when capital losses flow from a Partnerhip to an individual, the $3,000 limit for individual returns doesn’t apply? For example:

D and L are equal partners in the capital and profits of Ship Partnership, but are otherwise unrelated. L sold 300 shares of Mast Corp. to Ship Partnership

Year of purchase 2011

Year of sale 2014

Basis (cost) $9,000

Sales price (equal to fair market value) $4,000

The long-term capital loss that L recognized in 2014 on the sale stock was: $9,000 – $4,000 = $5,000 not limited..?

I can’t believe how much I’ve put into REG and I am still struggling. Exam on Tuesday…losing BEC if I don’t pass…..this HAS to happen. Help!

[leglock]

Based on your fact set if they had no other capital gains i would answer that they are limited to 3000 just as you were thinking. L is not a controlling partner therefore i do not think the loss is disallowed and is subject to the 3000 limit. U

[Anonymous]

@ leglock, yah me too. I can't tell why Wiley has the answer as 5k…ugh.

[Anonymous]

@ leglock, yah me too. I can't tell why Wiley has the answer as 5k…ugh.

[youngd8]

isn't it because it's reported under form k1?

I thought 3,000 limit was for only individual like form 1040

[leglock]

I guess it could be construed with different meanings. It asks what amount does L recognize. Definitely the 5000 would be a separately stated item shown on k1. The question does not state whether he did or did not have other capital gains. Therefore its a toss up whether the answer should be 5000 or limited to 3000.

[Author]

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