Mia Is a 50% Partner in a Partnership with a Beginning

question 87

Multiple Choice

Mia is a 50% partner in a partnership with a beginning of the year adjusted basis in her partnership interest of $50,000.For the current year,no distributions are made to partners,and there is no change in partnership liabilities.The partnership incurred a $140,000 ordinary loss for the year.How does Mia treat her loss in excess of basis?

• A)She will recognize $3,000 this year and carry forward the balance.
• B)She will first carry back the excess loss for two years and then carry forward the balance up to 20 years.
• C)She will carry over the excess loss indefinitely until a subsequent year when she again has a positive basis in her partnership interest.
• D)She will first carry back the excess loss three years and then carry forward the balance up to five years.

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