At the beginning of the tax year,Wick's basis for his partnership interest and his amount at risk in the partnership was $30,000.His share of partnership items for the year consisted of tax-exempt interest income of $2,000 and an ordinary loss of $44,000.He also received a distribution from the partnership of $20,000 cash during the year.For the tax year,Wick will report:
A)A nontaxable distribution of $20,000,an ordinary loss of $10,000,and a suspended loss carryforward of $34,000.
B)An ordinary loss of $32,000,a suspended loss carryforward of $12,000,and a taxable distribution of $20,000.
C)A nontaxable distribution of $20,000,an ordinary loss of $12,000,and a suspended loss carryforward of $32,000.
D)An ordinary loss of $44,000 and a nontaxable distribution of $20,000.

Question

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Wick's share of partnership loss is greater than his basis ($44,000 > $30,000), which means he will have a suspended loss carryforward of $14,000 ($44,000 - $30,000). Wick received a cash distribution of $20,000, but since his basis was only $30,000, $10,000 of the distribution will be taxable. Wick's tax-exempt interest income does not affect his basis or at-risk amount. Therefore, Wick will report a nontaxable distribution of $20,000, an ordinary loss of $12,000 ($44,000 loss - $20,000 distribution + $2,000 tax-exempt interest income), and a suspended loss carryforward of $32,000 ($14,000 from the current year plus $18,000 from prior years).

At the Beginning of the Tax Year,Wick's Basis for His