Jamie contributed fully depreciated ($0 basis)property valued at $30,000 to the JKLM Partnership in exchange for a 40% interest in partnership capital and profits.During the first year of partnership operations,JKLM had net taxable income of $80,000 and tax-exempt income of $10,000.The partnership distributed $20,000 cash to Jamie.Her share of partnership recourse liabilities on the last day of the partnership year was $13,000.Jamie's adjusted basis (outside basis)for her partnership interest at year-end is:
A)$16,000.
B)$29,000.
C)$59,000.
D)$79,000.
E)None of the above.

Question

Quizplus · Accepted Answer

Jamie is a 40% partner and will share in 40% of the partnership taxable income and tax-exempt income.In addition,her basis will include her allocable share of the partnership's recourse liabilities.Her basis will be reduced by the cash distribution during the year.Jamie's ending basis is calculated as follows: $0 beginning basis + $32,000 (40% F1F1F1S1F1F1F10 $80,000)income + $4,000 (40% F1F1F1S1F1F1F10 $10,000)tax-exempt income - $20,000 distribution + $13,000 share of liabilities.

Jamie Contributed Fully Depreciated ($0 Basis)property Valued at $30,000 to the JKLM