Bev and Cabel each have 50% ownership in Finch Partnership. Bev's partnership interest has a basis of $225,000. Finch's taxable income for the current year is $100,000, and it distributes $180,000 to each partner. Bev's partnership interest basis at the end of the year is:
A)$0.
B)$45,000.
C)$95,000.
D)$100,000.
E)None of the above.

Question

Quizplus · Accepted Answer

Bev's share of the taxable income is $50,000 ($100,000 x 50%), which increases her basis to $275,000 ($225,000 + $50,000). Since the partnership distributed $180,000 to Bev, her basis decreases to $95,000 ($275,000 - $180,000).

Bev and Cabel Each Have 50% Ownership in Finch Partnership