In 2017, Kipp Invested $65,000 for a 30% Interest in a Partnership

question 2

Multiple Choice

In 2017, Kipp invested $65,000 for a 30% interest in a partnership conducting a passive activity. The partnership reported losses of $200,000 in 2017 and $100,000 in 2018, Kipp's share being $60,000 in 2017 and $30,000 in 2018. How much of the losses from the partnership can Kipp deduct assuming he owns no other investments and does not participate in the partnership's operations?

• A)$0 in 2017; $30,000 in 2018.
• B)$60,000 in 2017; $30,000 in 2018.
• C)$60,000 in 2017; $5,000 in 2018.
• D)$60,000 in 2017; $0 in 2018.
• E)None of the above.

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Definitions:

Selling Expenses

Costs associated with the selling of a company's products or services, including advertising, sales commissions, and store maintenance.

Finished Goods Inventory

The total value of all completed products that are ready for sale but have not been sold yet.

Indirect Labor

Labor costs not directly associated with the manufacturing of a product, such as maintenance and administrative staff expenses.

Direct Materials

Materials in their unprocessed state that are directly linked to the manufacturing of specific products or services.