In the current year,Darlene purchases a 20% interest in the Grant Partnership (GP)for $10,000.During the current year,GP has a taxable income of $80,000 and Darlene withdraws $5,000 of cash from the partnership.Darlene's income to be reported from her investment in GP and her basis in GP at the end of the year is:
Income Basis

Question

In the current year,Darlene purchases a 20% interest in the Grant Partnership (GP)for $10,000.During the current year,GP has a taxable income of $80,000 and Darlene withdraws $5,000 of cash from the partnership.Darlene's income to be reported from her investment in GP and her basis in GP at the end of the year is:
​Income Basis

Quizplus · Accepted Answer

Darlene's income from the partnership is 20% of $80,000, which is $16,000. Her basis at the end of the year is her initial investment of $10,000 plus her share of the income ($16,000), minus the cash withdrawal ($5,000), totaling $21,000.

In the Current Year,Darlene Purchases a 20% Interest in the Grant