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

question 115

Multiple Choice

At the beginning of the tax year,Zach'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,Zach 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:

Vicinal

describes atoms or functional groups located on adjacent carbon atoms within a molecule.

Aryl

A functional group or substituent derived from an aromatic ring, such as phenyl or naphthyl.

Major Organic Product

In a chemical reaction, the organic product that is formed in the greatest amount, typically favored by the reaction conditions or kinetics.

Iodomethane

An organoiodine compound with the chemical formula CH3I, used in various chemical reactions.