Richard Has a 50% Interest in a Partnership,and He Materially

question 25

Multiple Choice

Richard has a 50% interest in a partnership,and he materially participates in the partnership's business.Richard's adjusted basis in the partnership was $60,000 at the beginning of the year,including his share of partnership liabilities.There were no distributions to Richard during the year.During the current year,the partnership borrowed $160,000 from a local bank to purchase equipment needed in the business.All of the partners are personally liable for all partnership debts.The partnership incurred a $320,000 loss this year.What amount can Richard claim as a loss from the partnership on his individual tax return this year?

• A)$60,000
• B)$80,000
• C)$140,000
• D)$160,000

---

Definitions:

Capital

Refers to the financial resources available for use in the production of goods or the provision of services.

Sole Proprietorship

An enterprise that a single person owns and runs, where there's no legal separation between the proprietor and the enterprise itself.

Limited Liability Company

A business structure that combines the pass-through taxation of a partnership or sole proprietorship with the limited liability of a corporation.

Corporation

A legal entity that is separate and distinct from its owners, offering limited liability to its shareholders, and is capable of owning property, being liable, and suing or being sued.