Allocate Partnership Income And Losses Practice Test

Metro LP has two partners, A1 (general partner) and B1 (limited partner). The partnership agreement provides that profits and losses are allocated based on capital contributions. At formation, A1 contributed $30,000 and B1 contributed $70,000. In the current year, Metro has an ordinary business loss of $40,000 and no other items. What is the correct allocation of losses among partners under IRC Section 704(a) based on the agreement?

Xenon Partners is a general partnership with partners Y1 and Z1. The partnership agreement provides that profits and losses are allocated 70% to Y1 and 30% to Z1, with no special allocations. Xenon has $90,000 of ordinary business income for the year. Based on the partnership agreement, how should income be allocated under IRC Section 704(a)?