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:

Net Present Value Method

A financial modeling technique that evaluates the profitability of an investment by discounting future cash flows to their present value and subtracting the initial investment.

Cash Flows

The total amount of money being transferred into and out of a business, often analyzed to assess the financial health of an organization.

Annual Return

The percentage of profit or loss on an investment over a one-year period.

Payback Period

The duration of time it takes to recoup the initial investment cost of a project or investment, through cash inflows or savings.