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Renee and George do business as the OP Partnership, sharing profits and losses equally. George is a material participant in the partnership, and the partnership has no outstanding debt. All parties use the calendar year for tax purposes. On January 1 of the current year, George's basis in the partnership was $150,000; he made no withdrawals from the partnership during the year. The partnership sustained an operating loss of $500,000 in the current year. George's personal income tax return for the current year should include a) an ordinary loss of $150,000. b) an ordinary loss of $250,000. c) an ordinary loss of $150,000 and a capital loss of $100,000. d) an ordinary loss of $100,000 and a capital loss of $150,000. e) None of the above

Renee and George do business as the OP Partnership, sharing profits and losses equally. George is a material participant in the partnership, and the partnership has no outstanding debt. All parties use the calendar year for tax purposes. On January 1 of the current year, George's basis in the partnership was $150,000; he made no withdrawals from the partnership during the year. The partnership sustained an operating loss of $500,000 in the current year. George's personal income tax return for the current year should include a) an ordinary loss of $150,000. b) an ordinary loss of $250,000. c) an ordinary loss of $150,000 and a capital loss of $100,000. d) an ordinary loss of $100,000 and a capital loss of $150,000. e) None of the above

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Renee and George do business as the OP Partnership, sharing profits and losses equally. George is a material participant in the partnership, and the partnership has no outstanding debt. All parties use the calendar year for tax purposes. On January 1 of the current year, George's basis in the partnership was $150,000; he made no withdrawals from the partnership during the year. The partnership sustained an operating loss of $500,000 in the current year. George's personal income tax return for the current year should include

  1. a) an ordinary loss of $150,000.
  2. b) an ordinary loss of $250,000.
  3. c) an ordinary loss of $150,000 and a capital loss of $100,000.
  4. d) an ordinary loss of $100,000 and a capital loss of $150,000.
  5. e) None of the above
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