An investor contributes $50,000 to an oil and gas limited partnership and also signs a recourse note for $30,000. The partnership generates a $100,000 loss allocated to this investor. How much can the investor deduct?

Why D — $80,000

Under the at-risk rules, the investor's maximum deductible loss is limited to their at-risk amount: $50,000 cash contribution + $30,000 recourse note = $80,000. The remaining $20,000 loss ($100,000 - $80,000) is suspended and carried forward to future years when additional at-risk amounts become available. Additionally, passive activity rules may further limit the deduction.