Ryan is a 25% partner in the ROCC Partnership. At the beginning of the tax year, Ryan's basis in the partnership interest was $90,000, including his share of partnership liabilities. During the current year, ROCC reported net ordinary income of $100,000. In addition, ROCC distributed $10,000 to each of the partners ($40,000 total). At the end of the year, Ryan's share of partnership liabilities increased by $10,000. Ryan's basis in the partnership interest at the end of the year is:

Question

Quizplus · Accepted Answer

Ryan's initial basis is $90,000. His share of the net ordinary income increases his basis by $25,000 (25% of $100,000). The distribution decreases his basis by $10,000. The increase in his share of liabilities increases his basis by $10,000. Therefore, his ending basis is $90,000 + $25,000 - $10,000 + $10,000 = $115,000.

Ryan Is a 25% Partner in the ROCC Partnership