Rvin's Adjusted Basis in the Gamma Partnership Is Zero at the Beginning

question 38

Multiple Choice

rvin's adjusted basis in the Gamma Partnership is zero at the beginning of the current year. He has a $15,000 suspended loss from the previous year. During the current year, Gamma's operating income is $30,000. Arvin is a 40% partner, and he receives a distribution of $10,000 cash this year. If Arvin materially participates in Gamma's operations, how much of the suspended loss can he deduct?

• A) $-0-
• B) $2,000
• C) $9,000
• D) $10,000
• E) $12,000

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Definitions:

Percentage Change

The measure of the degree of change over time and is used to express the relative difference between two numbers as a percentage.

Financial Statements

Documents presenting a detailed summary of a corporation's financial health, which encompasses the income statement, balance sheet, and cash flow statement.

Stockholders' Equity

The residual interest in the assets of a corporation that remains after deducting its liabilities, representing the ownership interest of shareholders.

Long-Term Liabilities

Obligations or debts that a company expects to pay after one year or beyond the current business cycle.