Meagan purchased her partnership interest from Lisa on the first day of the current year for $30,000 cash.She received a $15,000 cash distribution from the partnership during the year,and her share of partnership income is $12,000.If her share of partnership liabilities on the last day of the partnership year is $10,000,her outside basis for her partnership interest at the end of the year is $27,000.

Question

Quizplus · Accepted Answer

The outside basis in a partnership interest is calculated as follows:

Beginning basis + Contributions – Distributions + Share of Income/Loss – Share of Liabilities

In this case, the beginning basis is $30,000 (the amount Meagan paid for her partnership interest). Her contributions are zero, as she did not make any additional capital contributions during the year. Her distributions are $15,000. Her share of partnership income is $12,000. Her share of partnership liabilities is $10,000.

So, using the formula above:

$30,000 (beginning basis) + $0 (contributions) - $15,000 (distributions) + $12,000 (share of income) - $10,000 (share of liabilities) = $17,000

Therefore, her outside basis at the end of the year is $17,000, not $27,000. The statement is false.

Meagan Purchased Her Partnership Interest from Lisa on the First