Stan Had a Basis in His Partnership Interest at the Beginning

question 27

Multiple Choice

Stan had a basis in his partnership interest at the beginning of last year of $30,000. There was no change in partnership liabilities during the year. His share of the partnership's ordinary loss last year was $40,000 and the partnership had no separately stated items. This year, Stan has a distributive share of ordinary income of $30,000. The taxable income from the partnership reported on Stan's personal income tax return this year (ignoring the at- risk and passive activity loss limitations) is

• A) $10,000 ordinary loss.
• B) $40,000 ordinary income.
• C) $20,000 ordinary income.
• D) $30,000 ordinary income.

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Definitions:

Simplify

In mathematics, to reduce an expression or equation to its simplest form or most understandable version.

Evaluate

The act of determining the worth of a given expression.

Simplify

The process of reducing an expression to its most basic form or smallest possible components.

Evaluate

Finding out the numerical value associated with an expression.