Harold has a 50% interest in a general partnership that has a $14,000 loss for the year.He materially participates in the partnership, his basis in the partnership is $10,000 at the beginning of the year.He also has salary from other employment of $46,000.What is Harold's basis in the partnership at the end of the year?
A)$14,000
B)$10,000
C)$7,000
D)$3,000

Question

Quizplus · Accepted Answer

Harold's initial basis in the partnership is $10,000. Since he has a 50% interest in the partnership, his share of the loss is 50% of $14,000, which is $7,000. Subtracting this loss from his initial basis, $10,000 - $7,000 = $3,000, gives his basis at the end of the year.

Harold Has a 50% Interest in a General Partnership That