Thomas and Miles Are Equal Partners in a Partnership, Which

question 41

Multiple Choice

Thomas and Miles are equal partners in a partnership, which uses the calendar year as its tax year. On September 1, this year, Katie contributed $60,000 cash for a one-third interest in the partnership. The partnership reports a $24,000 ordinary loss for the tax year ending on December 31 of this year. The loss allocation to Katie (new partner) is

• A)$0.
• B)$2,667.
• C)$4,000.
• D)$8,000.

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Definitions:

Management Rights

The powers and authority given to managers or executives to make decisions and direct operations within an organization.

Limited Liability

A legal principle that limits an investor's loss in a business venture to the amount of capital they have invested, protecting personal assets from business debts.

Certificate of Limited Partnership

A legal document registered with a state authority to form a limited partnership, outlining key details and compliance.

RULPA

The Revised Uniform Limited Partnership Act, a set of laws adopted by some states to govern the formation, operation, and dissolution of limited partnerships.