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:

True Value

The actual, factual value or correctness of something, often used in the context of measurement, logic, or philosophy.

Unreliable

Lacking consistency or predictability; not able to be trusted to do or provide what is needed or expected.

Median

The median is the central number in a dataset that splits it into two halves of equal size.

Average

A numerical value expressing the central or typical value in a set of data, calculated as the sum of the values divided by the number of values.