Mr. Poulet is a partner in a partnership with a December 31 year end. Mr. Poulet's share of the partnership allocations for 2020 are as follows: • business income of $120,000
• charitable donations of $1,500
• partnership draws totalling $100,000
Mr) Poulet's partnership interest had an adjusted cost base on January 1, 2020 of $222,000. What is the adjusted cost base on January 1, 2021?
A)$120,500
B)$240,500
C)$242,000
D)$243,500

Question

Quizplus · Accepted Answer

The adjusted cost base (ACB) is calculated by taking the opening ACB, adding the share of income, and subtracting the draws. Starting ACB is $222,000, add business income of $120,000, subtract draws of $100,000, resulting in an ACB of $242,000. Charitable donations do not affect the ACB.

Mr Poulet Is a Partner in a Partnership with a December