Joey and Bob Each Have a 50% Interest in a Partnership

question 367

Multiple Choice

Joey and Bob each have a 50% interest in a Partnership. Both Joey and the partnership file returns on a calendar- year basis. Partnership Q had a $12,000 loss in 2017. Joey's adjusted basis in his partnership interest on January 1, 2017, was $5,000. In 2018, the partnership had a profit of $10,000. Assuming there were no other adjustments to Joey's basis in the partnership, what amount of partnership income (loss) should Joey show on his 2017 and 2018 individual income tax returns?

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Definitions:

Systematic Judgment

The process of making decisions or conclusions based on a methodical consideration of evidence, criteria, or predetermined rules.

Potential Employee

An individual who is being considered for employment within an organization, typically during the recruitment and selection process.

Perceiver Expectations

The assumptions or beliefs that an observer holds about a situation or individual that can influence their perception and interpretation.

Pygmalion Effect

The phenomenon where higher expectations lead to an increase in performance.