In 2014, Kipp Invested $65,000 for a 30% Interest in a Partnership

question 24

Multiple Choice

In 2014, Kipp invested $65,000 for a 30% interest in a partnership conducting a passive activity. The partnership reported losses of $200,000 in 2014 and $100,000 in 2015, Kipp's share being $60,000 in 2014 and $30,000 in 2015. How much of the losses from the partnership can Kipp deduct assuming he owns no other investments and does not participate in the partnership's operations?

• A) $0 in 2014; $30,000 in 2015.
• B) $60,000 in 2014; $30,000 in 2015.
• C) $60,000 in 2014; $5,000 in 2015.
• D) $60,000 in 2014; $0 in 2015.
• E) None of the above.

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Definitions:

Cost Object

Any item for which a separate measurement of costs is desired; can include products, services, projects, or activities.

Indirect Materials

Materials used in the production process that are not directly traceable to individual products, such as lubricants and cleaning supplies.

Specific Production

A manufacturing or production process tailored to produce specific, customized products for individual customers' requirements.

Process Costing System

An accounting system used to calculate the cost of producing products in industries where the production process is continuous.