Michael is a 40% partner in the Juno Partnership. At the beginning of the tax year, Michael's basis in the partnership interest was $80,000, including his share of partnership liabilities. During the current year, Juno reported an ordinary income of $50,000. In addition, Juno distributed $7,500 to each of the partners ($22,500 total). At the end of the year, Michael's share of partnership liabilities increased by $15,000. What is Michael's basis in the partnership interest at the end of the year?
Michael is a 40% partner in the Juno Partnership. At the beginning of the tax year, Michael's basis in the partnership interest was $80,000, including his share of partnership liabilities. During the current year, Juno reported an ordinary income of $50,000. In addition, Juno distributed $7,500 to each of the partners ($22,500 total). At the end of the year, Michael's share of partnership liabilities increased by $15,000. What is Michael's basis in the partnership interest at the end of the year?
Chapter14: Choice Of Business Entity—operations And Distributions
Section: Chapter Questions
Problem 21P
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What is Michael's basis in the
Transcribed Image Text:Michael is a 40% partner in the Juno Partnership.
At the beginning of the tax year, Michael's basis
in the partnership interest was $80,000, including
his share of partnership liabilities. During the
current year, Juno reported an ordinary income
of $50,000. In addition, Juno distributed $7,500 to
each of the partners ($22,500 total). At the end of
the year, Michael's share of partnership liabilities
increased by $15,000. What is Michael's basis in
the partnership interest at the end of the year?
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