A partnership has one general partner, Allen, who materially participates in the business. Allen had a $30,000 distributive share of ordinary losses for this year and the partnership had no separately stated gains or losses. There are no changes in liabilities during this year and there are no additional contributions or distributions. At the beginning of this year, the Sec. 705 basis was $40,000 and the at-risk basis was $15,000. The basis on December 31 of this year based on the above information is
A)$10,000.
B)$15,000.
C)$25,000.
D)$40,000.

Question

Quizplus · Accepted Answer

The basis on December 31 of this year is $10,000. This is calculated by subtracting the $30,000 distributive share of ordinary losses from the beginning Sec. 705 basis of $40,000. The at-risk basis does not affect this calculation.

A Partnership Has One General Partner, Allen, Who Materially Participates