Carol & Bill are equal partners in Weare Partnership. Carol\'s capital account h
ID: 2450615 • Letter: C
Question
Carol & Bill are equal partners in Weare Partnership. Carol's capital account has a balance of $100,000 at the beginning of the year and Weare Partnerhip has recourse debts of $50,000 at the beginning of the year and $90,000 at the end of the year, payable to unrelated parties. All partnership recourse debt is shared equally between Bill & Carol. Weare Partnership files on the accrual basis, and has the following account balances this year:
Taxable income $200,000
Municipal Interest 7,000
STCL 10,000
Lobbying Expenses 2,000
Charitable Contributions 5,000
Cash Distributions to Carol 20,000
What is Carol's basis in the partnership interest at the end of the year?
Explanation / Answer
Carol's capital account balance at the beginning of the year = $ 100000
Add: increase in carol's share of partnership liabilities = $ 45000
Add: distributive share of taxable income = $ 100000
Less : municipal interest = $ 3500
Less : stcl = $ 5000
Less : charitable contributions : $ 2500
Less : cash distributions to Carol = $ 20000
Carol's partnership basis at the end of the the year = $ 114000