Question

Meredith has a 40-percent interest in the assets and income of the gantt partnership, and the basis in her partnership interest is $60,000 at the beginning of 2022. During 2022, the partnership's net loss is $45,000 and meredith's share of the loss is $18,000. also, Meredith receives a cash distribution from the partnership of $8,000 on june 30, 2022.

Answer 1

Meredith begins with a $60,000 basis in the Gantt partnership. After accounting for her $18,000 share of the loss and an $8,000 cash distribution, her ending basis for 2022 is $34,000.

Step-by-step explanation:

Meredith is a partner in the Gantt partnership with a 40-percent interest. Her starting basis in the partnership is $60,000. She shares in the partnership's net loss, which affects her basis and her cash distribution also impacts her overall interest in the partnership. This scenario involves understanding partnership taxation rules and how they affect a partner's basis.

Her shared net loss is $18,000 (40% of $45,000); this will decrease her basis in the partnership. Meanwhile, the cash distribution of $8,000 she receives will also decrease her basis. After these transactions, Meredith's ending basis in the partnership would be:

Beginning Basis = $60,000
Decrease due to shared loss = $60,000 - $18,000 = $42,000
Decrease due to cash distribution = $42,000 - $8,000 = $34,000

The final answer is that Meredith's ending basis in the Gantt partnership for the year 2022 is $34,000. It is calculated by subtracting both her share of the net loss and cash distribution from her initial basis.