Roger is a 30% partner in the ROC Partnership.At the beginning of the tax year,Roger'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,Roger's share of partnership liabilities increased by $20,000.Roger's basis in the partnership interest at the end of the year is:
A)$60,000.
B)$75,000.
C)$87,000.
D)$120,000.
E)None of the above.

Question

Quizplus · Accepted Answer

Roger's basis in the partnership interest can be determined using the following formula:
Beginning basis + Share of income - Share of distributions + Share of liabilities

Beginning basis = $60,000
Share of income = $40,000 x 30% = $12,000
Share of distributions = $5,000 x 30% = $1,500
Share of liabilities = $20,000 x 30% = $6,000

Roger's basis in the partnership interest at the end of the year = $60,000 + $12,000 - $1,500 + $6,000 = $87,000

Therefore, the correct answer is C).

Roger Is a 30% Partner in the ROC Partnership