Ryan is a 25% partner in the ROCC Partnership. At the beginning of the tax year, his 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. His basis in the partnership interest at the end of the year is:
A) $90,000.
B) $100,000.
C) $115,000.
D) $125,000.
E) $190,000.

Question

Quizplus · Accepted Answer

Ryan's basis in the partnership interest at the end of the year is calculated as follows: Starting basis of $90,000 + his share of net ordinary income ($100,000 * 25% = $25,000) + increase in his share of partnership liabilities ($10,000) - distribution received ($10,000) = $115,000.

Ryan Is a 25% Partner in the ROCC Partnership