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

question 108

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

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Definitions:

Standard Sales Contract

An agreement that outlines the terms and conditions of a sale, typically using established clauses to facilitate common transactions.

Adhesion Contract

A standard-form contract prepared by one party, usually favoring that party, to which the other party has little negotiation power and often must accept as is.

Outward Manifestation

Outward manifestation refers to the external display or expression of a condition, intention, or agreement, observable by others.

Reasonable Amount

an amount or quantity that is considered fair, appropriate, or moderate under the circumstances.