The STU Partnership, an electing Large Partnership, has no passive activities and reports the following transactions for the year: net long-term capital losses $50,000, Sec. 1231 gain $60,000, ordinary income $20,000, charitable contributions $15,000, and tax-exempt income $2,000. How much will be reported as long-term capital gains to its partners?
A)$0
B)$10,000
C)$50,000
D)$60,000

Question

Quizplus · Accepted Answer

Since the STU Partnership has no passive activities, the net long-term capital losses of $50,000 will be deducted from the Sec. 1231 gain of $60,000 to arrive at a net long-term capital gain of $10,000. The partnership will report this $10,000 as long-term capital gains to its partners.

The STU Partnership, an Electing Large Partnership, Has No Passive