Alex is a partner in a calendar year partnership. His partnership Schedule K-1 for the current tax year showed the following: Ordinary business income$ \quad $$ \quad $$\$ 41,000$
Short-term capital loss $ \quad $$ \quad $$ \quad $$\mathbf { 1 , 5 0 0 }$ Alex has a $7,000 loss carryforward from the partnership last year, which he could not deduct because of the basis limitation. What is his tax basis in his partnership interest at the end of the current tax year?

Question

Alex is a partner in a calendar year partnership. His partnership Schedule K-1 for the current tax year showed the following: Ordinary business income$ \quad $$ \quad $$\$ 41,000$
Short-term capital loss  $ \quad $$ \quad $$ \quad $$\mathbf { 1 , 5 0 0 }$ Alex has a $7,000 loss carryforward from the partnership last year, which he could not deduct because of the basis limitation. What is his tax basis in his partnership interest at the end of the current tax year?

Quizplus · Accepted Answer

The basis is increased by the ordinary business income of $41,000 and decreased by the short-term capital loss of $1,500. The basis is then increased by the $7,000 loss carryforward that could not be deducted last year. The resulting basis is $41,000 + $7,000 - $1,500 = $46,500. However, the basis cannot exceed the partner's capital account, which is not given in the question. Therefore, the basis is $32,500.

Alex Is a Partner in a Calendar Year Partnership \quad

Alex Is a Partner in a Calendar Year Partnership $\quad$