Joe quick and jane reddy are equal partners in the quick and reddy partnership.

Question

Joe quick and jane reddy are equal partners in the quick and reddy partnership. On the first day of the current taxable year, joe's adjusted basis in his partnership interest is $10,000 and jane's adjusted basis is $2,000. During the year, joe had withdrawals of $25,000 and jane had withdrawals of $20,000. Given the following partnership activity for the year, determine each partner's adjusted basis in the quick and reddy at the end of the taxable year.

ordinary income $60,000

section 1231 gains 1,000

interst income from municipal bonds 500

short term capital losses 2,000

charitable contributions 3,000

Explanation / Answer

Quick & Ready Partnership Opening Balance Withdrawals Share in Profits Closing Balance Joe Quick 0.5 10000 25000 30250 15250 Jane Ready 0.5 2000 20000 30250 12250 Ordinary Income 60000 Section 1231 Gains 1000 Interest Income 500 STCG 2000 Charitable Donations 3000 Total Income 60500 Joe Quick 0.5 30250 Jane Ready 0.5 30250

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