Rick is a 30% partner in the ROC Partnership.At the beginning of the tax year, Rick's basis in the partnership interest was $60,000, including his share of partnership liabilities.During the current year, ROC reported net ordinary income of $40,000.In addition, ROC distributed $5,000 to each of the partners ($15,000 total).At the end of the year, Rick's share of partnership liabilities increased by $20,000.Rick's basis in the partnership interest at the end of the year is:
A)$120,000.
B)$87,000.
C)$75,000.
D)$60,000.
E)None of the above.

Question

Quizplus · Accepted Answer

Rick's basis in the partnership interest at the end of the year is $87,000. This is calculated as follows:Beginning basis: $60,000Add: Share of net ordinary income (30% of $40,000): $12,000Add: Increase in share of partnership liabilities: $20,000Less: Distributions received: $5,000Ending basis: $87,000

Rick Is a 30% Partner in the ROC Partnership