Orange, Inc $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $ (120,000 )
Liabilities:
Note Payable, City Bank

question 20

Multiple Choice

Orange, Inc. is a calendar year partnership with the following current year information:
Operating loss $\quad$$\quad$$\quad$$\quad$$\quad$ $ (120,000 )
Liabilities:
Note payable, City Bank $\quad$$\quad$ 20,000
Note payable, Jack Crow $\quad$$\quad$ 20,000
On January 1, John James bought 50% general interest in Orange, Inc. for $30,000. How much of the operating loss may John deduct on his Form 1040? Assume the excess business loss limitation does not apply.

• A) $60,000
• B) $30,000
• C) $40,000
• D) $50,000

---

Definitions:

UCC

The Uniform Commercial Code, a standardized set of laws and regulations designed to facilitate commercial transactions and harmonize business law across the U.S.

Section 2-207

Refers to a provision in the Uniform Commercial Code dealing with the acceptance of an offer and the terms of contracts.

Taking Advantage

Taking advantage refers to the act of using a situation or person's condition to gain a benefit, often in an unethical or unfair manner.

Insufficient Postage

Occurs when an item of mail does not have enough postage attached to cover the required fee for delivery.