Fundamentals of Taxation 2011 4th Edition by Ana Cruz, Debra Prendergast, Dan Schisler, Michael Deschamps

Exercise 14

Alcott invested $20,000 for a 25% interest in a partnership (not a passive activity) on January 1, 2009. The partnership borrowed $100,000 (with full recourse to the partners) on January 15, 2009, to cover short-term cash flow requirements. During the year, the partnership generated a $60,000 loss. By December 31, 2009, the partnership had paid off $20,000 of the loan. What is Alcott's at-risk amount on January 1, 2010? a. $20,000.
B) $25,000.
C) $40,000.
D) $45,000.