Jerry, a partner with 30percent capital and profits 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 of non-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?
A)$35,000
B)$40,000
C)$45,500
D)$49,500

Question

Quizplus · Accepted Answer

Jerry's adjusted basis in his partnership interest at the end of the year is $45,500. This is calculated by taking his beginning tax basis of $50,000, subtracting the ordinary loss of $15,000, adding the long-term capital gain of $3,000, adding the qualified dividends of $2,000, adding the $10,000 cash contribution, and subtracting the $4,000 reduction in his share of partnership debt.

Jerry, a Partner with 30percent Capital and Profits Interest, Received