Mia Is a 50% Partner in a Partnership with a Beginning

question 87

Multiple Choice

Mia is a 50% partner in a partnership with a beginning of the year adjusted basis in her partnership interest of $50,000.For the current year,no distributions are made to partners,and there is no change in partnership liabilities.The partnership incurred a $140,000 ordinary loss for the year.How does Mia treat her loss in excess of basis?

• A)She will recognize $3,000 this year and carry forward the balance.
• B)She will first carry back the excess loss for two years and then carry forward the balance up to 20 years.
• C)She will carry over the excess loss indefinitely until a subsequent year when she again has a positive basis in her partnership interest.
• D)She will first carry back the excess loss three years and then carry forward the balance up to five years.

---

Definitions:

Stored Goods

Items that are kept in a warehouse or other storage location for future use, sale, or distribution.

Stolen Article

An item that has been taken without permission, leading to the loss of ownership or possession by the rightful owner.

Fair Market Price

The price of a good or service that is agreed upon by both buyer and seller, under conditions where both have reasonable knowledge of the pertinent facts and neither is under compulsion to transact.

Financial Loss

The decrease in monetary value resulting from an event, transaction, or series of transactions.