In 2014,Arnold Invests $80,000 for a 20% Interest in a Partnership

question 1

Multiple Choice

In 2014,Arnold invests $80,000 for a 20% interest in a partnership in which he is a material participant.The partnership incurs a loss with $100,000 being Arnold's share.Which of the following statements is incorrect?

• A)Since Arnold has only $80,000 of capital at risk,he cannot deduct any more than this amount against his other income.
• B)Arnold's nondeductible loss of $20,000 can be carried over and used in future years (subject to the at­risk provisions).
• C)If Arnold has taxable income of $40,000 from the partnership in 2015 and there are no other transactions that affect his at-risk amount,he can use all of the $20,000 loss carried over from 2014.
• D)Arnold's $100,000 loss is nondeductible in 2014 and 2015 under the passive loss provisions.
• E)All of the statements are correct.

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Resource Reduction

Strategies or actions taken to decrease the amount of resources used, including materials, energy, and labor, often to improve efficiency or sustainability.

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Long-term significant changes in the patterns of temperature, precipitation, and weather phenomena attributed largely to human activities.

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