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don wolf became a general partner in gata associates on january 1 2007 with a 5 inte 624529

Don Wolf became a general partner in Gata Associates on January 1, 2007, 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, 2007, 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 2007 is

  1. $0
  2. $4,000
  3. $5,000
  4. $6,000

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