In 2012, Arnold Invests $80,000 for a 20% Interest in a Partnership

question 88

Multiple Choice

In 2012, 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 at-risk provisions).
• C)If Arnold has taxable income of $40,000 from the partnership in 2013 and there are no other transactions that affect his at-risk amount, he can use all of the $20,000 loss carried over from 2012.
• D)Arnold's $100,000 loss is nondeductible in 2012 and 2013 under the passive loss provisions.
• E)All of the statements are correct.

Realize the potential risks and outcomes of cannibalization within brand strategies.

Identify various quantitative and qualitative techniques used to measure and enhance brand strength.

Understand the legal framework and principles governing the assignment and delegation of contract rights and duties.

Recognize the conditions under which an assignment or delegation is valid and enforceable.

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Definitions:

Controllable Fixed Costs

Fixed costs that management has the ability to influence or change in the short term.

Profit Center

A responsibility center that incurs costs and also generates revenues.

Average Operating Assets

The average value of the assets used in the normal operations of a business over a certain period, often used in evaluating the performance of investment centers.

Controllable Margin

A financial metric used to assess the amount of profit that can be controlled or influenced by managerial decisions.