At the Beginning of This Year, Edmond and Samuel Were

question 31

Multiple Choice

At the beginning of this year, Edmond and Samuel were equal partners in a partnership that uses the calendar year as its tax year. On October 1, this year, Joan contributed $48,000 cash for a one-third interest in the partnership. The interests of both Edmond and Samuel drop to one-third. The partnership reports a $36,000 ordinary loss for the current tax year ending December 31. The loss allocation to Samuel (one of the original partners) is

• A)$12,000.
• B)$13,500.
• C)$16,500.
• D)$18,000.

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Definitions:

Nonprofit Cemetery

A burial ground operated by an organization that does not seek to make a profit, often eligible for certain tax exemptions.

Schedule A

The section of the tax form 1040 used by taxpayers to itemize deductions.

Itemized Deductions

Specific expenses that taxpayers can report in order to decrease their taxable income, as opposed to taking a standard deduction.

Mortgage Interest

The interest paid on a mortgage loan, which may be deductible on U.S. federal income tax, reducing taxable income.