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

question 4

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 of $20,000 cash from the partnership during the year. He 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.

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Definitions:

Specific

Clearly defined or identified; precise and unambiguous.

Challenging Goals

Objectives that are ambitious and require substantial effort and planning to achieve, often motivating individuals or teams to improve their performance.

Equity Theory

A theory of motivation that suggests individuals are motivated by their perception of fairness in the distribution of rewards and resources.

Inputs

Anything that people give up, offer, or trade to their organization in exchange for outcomes.