In December of 2014, you get a call from a potential new client, Ralph who tells you he just fired his old accountant because she told him she doesn’t think he will be able to deduct his losses from ABC Partnership LLC in 2014. Ralph purchased a 10% interest in ABC Partnership in 2012 for $50,000. You request copies of his K-1s from ABC Partnership which report Ralph's income/(losses) as follows:

2012 5,000

2013               (65,000)

ABC Partnership has told Ralph he should expect a loss of approximately $10,000 in 2014. He materially participates in the operations and doesn’t understand why his losses would be limited. He has no problems with his cash flow and has an unusual obsession with legally paying as little taxes as possible. Is there anything Ralph can do to get a deduction for the ABC losses in 2014?