Wayne and Wendy Are Equal Partners in ABC Windows

question 4

Multiple Choice

Wayne and Wendy are equal partners in ABC Windows. Wayne is a general partner and Wendy is a limited partner. Each partner invested $20,000 in the company. ABC Windows experienced a loss of $50,000 this year. Which of the following statements regarding this loss is TRUE?

• A) Wayne may claim a loss for tax purposes of $25,000 this year.
• B) Wendy may claim a loss for tax purposes of $25,000 this year.
• C) Wayne may claim a loss for tax purposes of $50,000 this year.
• D) Wendy may claim a loss for tax purposes of $50,000 this year.

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Definitions:

Constant Rate

A situation or process that occurs at an unchanging, steady pace over a particular period of time.

Bread

A staple food made from a dough of flour and water, usually by baking.

Production Possibilities Frontier

A curve depicting all maximum output possibilities for two goods, given a set of inputs, representing the trade-off between the two goods.

Consumption Possibilities Frontier

A curve depicting all possible combinations of two goods or services that a consumer can purchase given their income and the prices of the goods.