Trish Potter is a 40% partner in The Rose Garden.The ACB of Trish's partnership interest at the beginning of 2020 was $50,000.During 2020, the partnership earned business income of $200,000 and a taxable capital gain of $12,000.Trish withdrew $10,000 from the partnership for personal expenses during the year.What is the ACB of Trish's partnership interest at the beginning of 2021?
A)$124,800
B)$129,600
C)$252,000
D)$264,000

Question

Quizplus · Accepted Answer

To calculate the ACB of Trish's partnership interest at the beginning of 2021, we need to take into account her share of the partnership income, as well as her personal withdrawals.

Trish's share of the partnership income for 2020 is calculated as follows:

Business income: $200,000 x 40% = $80,000 
Taxable capital gain: $12,000 x 40% = $4,800

Total partnership income: $80,000 + $4,800 = $84,800

Trish's ACB for 2020 can be calculated as follows:

Beginning ACB: $50,000 
Add: 40% share of partnership income for 2020: $84,800 
Subtract: Personal withdrawal: $10,000

ACB at the beginning of 2021: $124,800

Therefore, the best choice is B, $129,600.

Trish Potter Is a 40% Partner in the Rose Garden