Jerry, a partner with 30% capital and profit interest, received his Schedule K-1 from Plush Pillows, LP. At the beginning of the year, Jerry's tax basis in his partnership interest was $50,000. His current year Schedule K-1 reported an ordinary loss of$15,000, long-term capital gain of $3,000, qualified dividends of $2,000, $500 ofnon-deductible expenses, a $10,000 cash contribution, and a reduction of $4,000 in his share of partnership debt. What is Jerry's adjusted basis in his partnership interest at the end of the year?

Question

Quizplus · Accepted Answer

Beginning basis: $50,000
Plus: Cash contribution: $10,000
Plus: Income items:
   -Ordinary loss: $15,000
   -Long-term capital gain: $3,000
   -Qualified dividends: $2,000
   -Non-deductible expenses: $500
Minus: Expense item:
   -Reduction in share of partnership debt: $4,000

Total basis at the end of the year: $45,500.

Jerry, a Partner with 30% Capital and Profit Interest, Received