Q: 13
Don Wolf became a general partner in Gata Associates on January 1, 1989, with a 5% interest in
Gata's profits, losses, and capital. Gata is a distributor of auto parts. Wolf does not materially
participate in the partnership business. For the year ended December 31, 1989, Gata had an
operating loss of $100,000.
In addition, Gata earned interest of $20,000 on a temporary investment. Gata has kept the principal
temporarily invested while awaiting delivery of equipment that is presently on order. The principal
will be used to pay for this equipment. Wolf's passive loss for 1989 is:
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