In 2012, Kipp Invested $65,000 for a 30% Interest in a Partnership

question 62

Multiple Choice

In 2012, Kipp invested $65,000 for a 30% interest in a partnership conducting a passive activity. The partnership reported losses of $200,000 in 2012 and $100,000 in 2013, Kipp's share being $60,000 in 2012 and $30,000 in 2013. 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 2012; $30,000 in 2013.
• B)$60,000 in 2012; $30,000 in 2013.
• C)$60,000 in 2012; $5,000 in 2013.
• D)$60,000 in 2012; $0 in 2013.
• E)None of the above.

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Definitions:

Unlimited Liability

A legal structure wherein the business owners are personally responsible for all the debts and liabilities of the business.

Voting Rights

The rights of shareholders to vote on company matters, typically exercised at annual meetings and proportional to the number of shares held.

Dividend Paid

The portion of earnings a company distributes to its shareholders, typically expressed as a dollar amount per share.

Outstanding Shares

The total number of shares of a corporation's stock that are currently owned by all its shareholders, including share blocks held by institutional investors and restricted shares owned by the company’s officers and insiders.