Marian Owns 40% of Addison Company, a Partnership

question 32

Multiple Choice

Marian owns 40% of Addison Company, a partnership. Marian's adjusted basis in the partnership is $32,000 at the beginning of the year. During the current year, Marian receives a $10,000 cash distribution from the partnership. Addison Company reports a $100,000 operating loss for the current year. If Marian is not a material participant in Addison Company and has no other passive activities, how much of the partnership loss can she deduct on her income tax return?

• A)$-0-
• B)$10,000
• C)$22,000
• D)$40,000

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Definitions:

Resource Prices

refer to the costs associated with procuring the natural, human, and capital inputs required for the production of goods and services.

Incentive

A factor, often a reward or penalty, that motivates an individual or entity to act in a certain way.

Supply Curve

A visual diagram that illustrates how the price of a product correlates with the amount of the product that sellers are prepared to sell at various price levels.

Human Resource

A department within organizations focused on employee recruitment, management, and providing direction for the people who work in the institution.