Stan Had a Basis in His Partnership Interest at the Beginning

question 12

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)$20,000 ordinary income.
• C)$30,000 ordinary income.
• D)$40,000 ordinary income.

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Definitions:

Cost of Goods Sold

The direct costs attributable to the production of goods sold by a company, including materials and labor costs.

Merchandise Inventory

The goods a company has in stock that are ready to be sold, representing one of the primary sources of revenue for retail and wholesale businesses.

Vanishing Americans

A term sometimes used to discuss the decline or endangerment of Native American cultures and peoples.

Asian Americans

A group of Americans of full or partial Asian descent, representing various cultures, languages, and histories.