Question

Which of the following items will affect a partner's tax basis?

a. Share of qualified nonrecourse debt.
b. Share of nonrecourse debt.
c. Share of recourse debt.
d. Share of ordinary business income (loss).
e. All of the choices will affect a partner's tax basis.

Answer 1

Share of qualified nonrecourse debt, share of nonrecourse debt, share of recourse debt, and share of ordinary business income (loss) all affect a partner's tax basis in a partnership.

Step-by-step explanation:

A partner's tax basis is the amount of money or property that the partner has invested in a partnership. It is used to determine the partner's share of taxable income or loss. Share of qualified nonrecourse debt, share of nonrecourse debt, share of recourse debt, and share of ordinary business income (loss) all affect a partner's tax basis in a partnership.

For example, if a partner has a share of qualified nonrecourse debt, the partner's tax basis will increase by that share because the partner is personally responsible for repaying the debt. On the other hand, if a partner has a share of nonrecourse debt, the partner's tax basis will not increase because the partner is not personally liable for the debt.

Therefore, the correct answer is e. All of the choices will affect a partner's tax basis.