Cal and Ann Are a Married Couple Filing a Joint

question 875

Multiple Choice

Cal and Ann are a married couple filing a joint return. Ann earns a $700,000 salary as a bank executive. The couple has $150,000 of interest and dividend income. Cal is a 50% partner and material participant in CD Partnership. CD has incurred a $1.5 million ordinary loss this year, and Cal's share is $750,000. Cal's basis is large enough to absorb the loss. With respect to the partnership loss, the couple will deduct

• A) $750,000.
• B) $700,000.
• C) $250,000.
• D) $500,000.

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Definitions:

Riskier

Describing an option or investment with a higher level of uncertainty or potential for loss.

WACC

Stands for Weighted Average Cost of Capital, a calculation of a firm's cost of capital in which each category of capital is proportionately weighted.

Suitable Projects

Projects that align with a company's strategic goals, resource capabilities, and risk tolerance.

WACC

Weighted Average Cost of Capital (WACC) is a calculation of a firm's cost of capital in which each category of capital is proportionately weighted, used to evaluate investment decisions.