Which of the Following Statements Regarding Partnerships Losses Suspended by the Tax

question 3

Multiple Choice

Which of the following statements regarding partnerships losses suspended by the tax basis limitation is true?

• A)Partnership losses must be used only in the year the losses are created.
• B)Partnership losses may be carried back 2 years and carried forward 5 years.
• C)Partnership losses may be carried forward indefinitely.
• D)Partnership losses may be carried back 2 years and carried forward 20 years.

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Definitions:

Compensatory Damages

Financial compensation awarded to a plaintiff to reimburse for loss, injury, or harm suffered as a direct result of another's breach of duty or negligence.

Punitive Damages

Financial compensation awarded to an aggrieved party that goes beyond what is necessary to compensate for losses and is intended to punish the wrongdoer.

Fraud

A deliberate deception practiced to secure unfair or unlawful gain, or to deprive a victim of a legal right.

Scienter

A legal term referring to the knowledge of wrongdoing or fraudulent intent in actions that deceive others.