At the Beginning of the Tax Year, Zach's Basis for His

question 120

Multiple Choice

At the beginning of the tax year, Zach's basis for his partnership interest and his amount at risk in the partnership was $30,000.His share of partnership items for the year consisted of tax-exempt interest income of $2,000 and an ordinary loss of $44,000.He also received a distribution from the partnership of $20,000 cash during the year.Zach is an active general partner and has no passive income or business losses from other sources.For the tax year, Zach will report:

• A)A nontaxable distribution of $20,000, an ordinary loss of $10,000, and a suspended loss carryforward of $34,000.
• B)An ordinary loss of $32,000, a suspended loss carryforward of $12,000, and a taxable distribution of $20,000.
• C)A nontaxable distribution of $20,000, an ordinary loss of $12,000, and a suspended loss carryforward of $32,000.
• D)An ordinary loss of $44,000 and a nontaxable distribution of $20,000.
• E)None of the above.

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