Styling Shoes, LLC, filed its 20X8 Form 1065 on March 15, 20X9. Styling had three members with the following ownership interests and tax bases at the beginning of 20X8: (1)Jane, a member with a 25percent profits and capital interest and a $5,000 outside basis, (2)Joe, a member with a 45percent profits and capital interest and a $10,000 outside basis, and (3)Jack, a member with a 30percent profits and capital interest and a $2,000 outside basis. The following items were reported on Styling's Schedule K for the year: ordinary income of $100,000, Section 1231 gain of $15,000, charitable contributions of $25,000, and tax-exempt income of $3,000. In addition, Styling received an additional bank loan of $12,000 during 20X8. What is Jane's tax basis after adjustment for her share of these items?
A)$28,250
B)$31,250
C)$33,500
D)$57,250

Question

Quizplus · Accepted Answer

Jane's adjusted tax basis is calculated as follows: Starting with her initial outside basis of $5,000, add her share of the ordinary income ($100,000 * 25% = $25,000), her share of the Section 1231 gain ($15,000 * 25% = $3,750), and her share of the tax-exempt income ($3,000 * 25% = $750). The charitable contributions and the additional bank loan do not directly affect her basis in this context. Therefore, her adjusted basis is $5,000 + $25,000 + $3,750 + $750 = $34,500. However, since the correct answer is not listed, it appears there was a mistake in the calculation or in the interpretation of the question. Based on the provided choices, the correct calculation method or interpretation of the question might have been misunderstood.

Styling Shoes, LLC, Filed Its 20X8 Form 1065 on March