David Purchased a 10% Capital and Profits Interest in a Partnership

question 88

Multiple Choice

David purchased a 10% capital and profits interest in a partnership this year. He does not participate in the partnership's business. David has no passive income in the current year. His distributive share of the partnership's loss is $40,000 for this year. David's Sec. 705 basis in the partnership is $32,000 and his at-risk basis is $16,000 at the end of the current year. How much of the loss can David deduct on his tax return?

• A)$0
• B)$16,000
• C)$32,000
• D)$40,000

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Definitions:

Dendrites

The branched extensions of a neuron that receive messages and conduct impulses toward the cell body.

Neuron

A neuron is a nerve cell that is the basic building block of the nervous system, responsible for receiving, processing, and transmitting information through electrical and chemical signals.

Nerve Bundles

Collections of nerve fibers (axons) wrapped together, transmitting electrical impulses within the nervous system.

Central Nervous System

The complex network of nerves and cells that includes the brain and spinal cord, responsible for coordinating sensory information and response.