Q 1 Which represents the correct order of annual basis adjustments to S corporation bosts?

a. + share of income and gains - nondeductible items - share of loss and deduction items - tax free distributions

b. + tax free distributions - nondeductible items - share of loss and deduction items + share of income and gains.

c. + share of income and gains - nondeductible items - tax free distributions - share of loss and deduction items.

d. + share of income and gains - tax free distributions - nondeductible items - share of loss and deduction items.

Q2 Decker has a $1,000 loss from an activity in which he materially participates. He has $500 of basis in the activity and his at risk basis is $300. How much of the $1,000 loss may Decker deduct against ordinary income?

Q3 Hope and Joy formed a partnership by each contributing $3,000. This year, the partnership borrowed $60,000 as a nonrecourse loan. The loan is considered qualified nonrecourse debt. Each partner took a $1,000 distribution this year. What is each partner's at-risk amount at the end of the year?