The MOP Partnership is involved in leasing heavy equipment under long-term leases of five years or more. Patsy has an adjusted basis for her partnership interest on January 1 of the current year of $600,000,
consisting of the following:
Capital account $350,000
Share of partnership recourse debt 50,000
Share of partnership nonrecourse debt 200,000
$600,000
During the year, the partnership has an operating loss of $1.2 million and distributes $60,000 of cash to Patsy. Partnership liabilities were the same at the end of the tax year, and the nonrecourse debt is not "qualifiednonrecourse debt." If she owns a 60% share of partnership profits, capital, and losses, and is a materialparticipant in the partnership, how much of her share of the operating loss can Patsy deduct? What Code provisions could cause a suspension of the loss?