At the Beginning of the Tax Year,Wick's Basis for His

question 154

Multiple Choice

At the beginning of the tax year,Wick's basis for his partnership interest and his amount at risk in the partnership was $30,000.His share of partnership items for the year consisted of tax-exempt interest income of $2,000 and an ordinary loss of $44,000.He also received a distribution from the partnership of $20,000 cash during the year.For the tax year,Wick will report:

• A)A nontaxable distribution of $20,000,an ordinary loss of $10,000,and a suspended loss carryforward of $34,000.
• B)An ordinary loss of $32,000,a suspended loss carryforward of $12,000,and a taxable distribution of $20,000.
• C)A nontaxable distribution of $20,000,an ordinary loss of $12,000,and a suspended loss carryforward of $32,000.
• D)An ordinary loss of $44,000 and a nontaxable distribution of $20,000.

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Definitions:

Lipids

A diverse group of naturally occurring molecules that include fats, waxes, and oil, serving as energy storage and structural components of cell membranes.

Carbohydrates

Organic compounds made of carbon, hydrogen, and oxygen, serving as a major energy source for the body.

Denature Enzymes

The process by which enzymes lose their functional shape and, therefore, their activity, often due to changes in temperature or pH.

Optimum Temperature

The temperature at which a particular enzyme or metabolic process achieves its highest rate of activity.