Ryan is a 25% partner in the ROCC Partnership. At the beginning of the tax year,

Question

Ryan is a 25% partner in the ROCC Partnership. At the beginning of the tax year, Ryan’s basis in the partnership interest was $90,000, including his share of partnership liabilities. During the current year, ROCC reported net ordinary income of $100,000. In addition, ROCC distributed $10,000 to each of the partners ($40,000 total). At the end of the year, Ryan’s share of partnership liabilities increased by $10,000. Ryan’s basis in the partnership interest at the end of the year is:

$90,000.

$100,000.

$115,000.

$125,000.

None of the above.

Explanation / Answer

Basis @ Beginning of tax year 25% 90000 Add:Share in Ordinary Income 25% 25000 Add:Amt. distributed 10000 Less:Share of liabilities 10000 Basis @ End of the year 115000 Answer - $ 115000

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