Deducting losses

Partnerships are great vehicles for deducting losses funded by third-party debt, like depreciation funded by mortgage debt, or operating losses funded by accounts payable.  But some liabilities may not be eligible to be allocated.  And keep in mind that if the losses get allocated to partners one way, and the debt gets allocated differently, some partners may not have enough basis to take losses or distributions.  Understand your alternatives so you can plan for the best result.