An examination of the RB Partnership's tax books provides the following information for the current year: Operating (ordinary) income before guaranteed payments $300,000 Long-term capital gain 6,000 Guaranteed payment to Rachel for services 30,000 Cash distributions to Rachel 20,000 Interest on Colorado state bonds (exempt interest income) 2,000 Charitable contributions made by partnership 10,000 Decrease in partnership liabilities from 1/1-12/31 (20,000) Rachel is a 30% general partner in partnership capital,profits,and losses.Assume the adjusted basis of her partnership interest is $60,000 at the beginning of the year,and she shares in 30% of the partnership's liabilities for basis purposes.
a.What is Rachel's adjusted basis for the partnership interest at the end of the year?
b.
How much income must Rachel report on her tax return for the current year? What is the character of the income and what types of tax might apply to it?

Question

An examination of the RB Partnership's tax books provides the following information for the current year: Operating (ordinary) income before guaranteed payments $300,000 Long-term capital gain 6,000 Guaranteed payment to Rachel for services 30,000 Cash distributions to Rachel 20,000 Interest on Colorado state bonds (exempt interest income) 2,000 Charitable contributions made by partnership 10,000 Decrease in partnership liabilities from 1/1-12/31 (20,000) ​ Rachel is a 30% general partner in partnership capital,profits,and losses.Assume the adjusted basis of her partnership interest is $60,000 at the beginning of the year,and she shares in 30% of the partnership's liabilities for basis purposes.
a.What is Rachel's adjusted basis for the partnership interest at the end of the year?
b.​
How much income must Rachel report on her tax return for the current year? What is the character of the income and what types of tax might apply to it?

Quizplus · Accepted Answer

The Answer of An examination of the RB Partnership's tax books provides the following information for the current year: Operating (ordinary) income before guaranteed payments $300,000 Long-term capital gain 6,000 Guaranteed payment to Rachel for services 30,000 Cash distributions to Rachel 20,000 Interest on Colorado state bonds (exempt interest income) 2,000 Charitable contributions made by partnership 10,000 Decrease in partnership liabilities from 1/1-12/31 (20,000) ​ Rachel is a 30% general partner in partnership capital,profits,and losses.Assume the adjusted basis of her partnership interest is $60,000 at the beginning of the year,and she shares in 30% of the partnership's liabilities for basis purposes.
a.What is Rachel's adjusted basis for the partnership interest at the end of the year?
b.​
How much income must Rachel report on her tax return for the current year? What is the character of the income and what types of tax might apply to it?

An Examination of the RB Partnership's Tax Books Provides the Following