Multiple Choice
Identify which of the following statements is true.
A) Terri is a limited partner in the STU Partnership, which manufactures children's toys. Because the partnership is actively involved in a trade or business, Terri's income from the partnership is classified as active income for the passive activity loss rules.
B) Tom purchased for cash a 40% capital, profits, and loss interest in the TP General Partnership. His $140,000 basis in his partnership interest includes his $45,000 share of recourse debt and his $30,000 of nonrecourse debt (that is not qualified nonrecourse real estate financing) . His at- risk basis cannot be more than $65,000.
C) Although a partner's basis in the partnership cannot go below zero, a partner's book capital account (equity) may be negative.
D) All of the above are false.
Correct Answer:
Verified
Correct Answer:
Verified
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