Identify Which of the Following Statements Is True

question 9

Multiple Choice

Identify which of the following statements is true.

• A)Although a partner's basis in the partnership cannot go below zero, a partner's book capital account (equity)may be negative.
• B)Tom purchased for cash a 40% capital, profits, and loss interest in the TP General Partnership. His $140,000 basis in his partnership interest includes his $45,000 share of recourse debt and his $30,000 of nonrecourse debt (that is not qualified nonrecourse real estate financing). His at-risk basis cannot be more than $65,000.
• C)Terri is a limited partner in the STU Partnership, which manufactures children's toys. Because the partnership is actively involved in a trade or business, Terri's income from the partnership is classified as active income for the passive activity loss rules.
• D)All of the above are false.

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Definitions:

Fluorescent Lights

A type of lighting technology that uses a chemical reaction involving gases and mercury vapor to produce light, known for its energy efficiency compared to incandescent bulbs.

Machinery

Mechanical devices or assemblies, usually powered by motors or engines, designed to perform specific tasks.

Transformers

Electrical devices that transfer electrical energy between two or more circuits through electromagnetic induction, often used to increase or decrease voltage levels.

Emissions

The production and discharge of something, especially gas or radiation, into the environment.