CH11Exam3 - CH11 #1 , her basis in her partnership interest...

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CH11 #1 1) Rob and Bob are equal partners in the accrual basis RB Partnership. At the beginning of the year, Rob’s basis in the partnership (including his share of liabilities) was $100,000. Also, at the beginning of this year the partnership’s debts totaled $80,000 payable to unrelated parties. All partnership debt is shared equally between the partners. The following is information about RB’s current operations. Ordinary Income $ 80,000 Interest from City Bond $ 4,000 §1231 Gain $ 6,000 LTCL$ 750 STCL$ 550 Political Contributions$ 2,800 Charitable Contribution to Red Cross$ 850 Cash distribution to Rob$ $ 15,300 Payment of Rob's personal expenses $ 2,150: At the end of this partnership debt to unrelated parties is $95,000. A)What will Rob include in his taxable income as a result of RB’s activities? B) What is Rob’s basis in the partnership interest at the end of the year ? A)On Tax Return Not Taxed OI$40,000 2000 Muni interest §1231 $3,000 1400 Pool Construction LTCL (375) 1745 Distribution to Rob STCL (275) CC (425) B)Beg. Basis $100,000 debt increase 7500 income items- OI 40000 §1231 3000 Muni Interest 2000 Distrib (17450) Nondeductible Items 1400 Loss Items (375) (275) (425) Ending Basis $132,575 #2 The ABC Partnership plans to distribute cash of $23,500 to long- time partner John at the end of the tax year. The partnership will report a loss for the year and John’s share of the loss is $11,500. He has a basis of $16,000 in his partnership interest, including his share of partnership liabilities, prior to consideration of the distribution or the loss. The partnership expects to report substantial income next year. a-What rules are used to calculate ending basis in a partnership intere st? b- If ABC makes the distribution to John at the end of this year, how
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CH11Exam3 - CH11 #1 , her basis in her partnership interest...

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