Michelle is a 25% partner in the Summit Partnership. At the beginning of the tax year, Michelle's basis in the partnership interest was $45,000, including her share of partnership liabilities. During the current year, Summit reported an ordinary income of $60,000. In addition, Summit distributed $8,000 to each of the partners ($32,000 total). At the end of the year, Michelle's share of partnership liabilities decreased by $5,000. Michelle's basis in the partnership interest at the end of the year is: a. $45,000 b. $52,000 c. $55,000 d. $60,000 e. none of the above
Michelle is a 25% partner in the Summit Partnership. At the beginning of the tax year, Michelle's basis in the partnership interest was $45,000, including her share of partnership liabilities. During the current year, Summit reported an ordinary income of $60,000. In addition, Summit distributed $8,000 to each of the partners ($32,000 total). At the end of the year, Michelle's share of partnership liabilities decreased by $5,000. Michelle's basis in the partnership interest at the end of the year is: a. $45,000 b. $52,000 c. $55,000 d. $60,000 e. none of the above
Chapter14: Choice Of Business Entity—operations And Distributions
Section: Chapter Questions
Problem 21P
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Transcribed Image Text:Michelle is a 25% partner in the Summit Partnership. At the beginning of the tax
year, Michelle's basis in the partnership interest was $45,000, including her share of
partnership liabilities. During the current year, Summit reported an ordinary income
of $60,000. In addition, Summit distributed $8,000 to each of the partners ($32,000
total). At the end of the year, Michelle's share of partnership liabilities decreased by
$5,000. Michelle's basis in the partnership interest at the end of the year is:
a. $45,000
b. $52,000
c. $55,000
d. $60,000
e. none of the above
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