Final answer:
Steven's basis in his partnership interest on March 1 just prior to the sale is $45,500.
Step-by-step explanation:
Steven's basis in his partnership interest on March 1 just prior to the sale can be calculated by taking into account the changes in the partnership's income and the sale proceeds received. The partnership generated $30,000 of ordinary income during January and February, which would increase Steven's basis. However, since $4,500 of the income was tax-exempt, it does not affect the basis. Therefore, the increase in basis from the ordinary income is $30,000 - $4,500 = $25,500.
Next, we need to consider the sale of the partnership interest. The cash payment of $45,000 received by Steven would increase his basis by that amount. However, since the partnership's assets were worth $90,000 at the sale date, Steven's basis would be limited to his share of the partnership's basis in those assets.
Since Steven owned 1/3 of the partnership, his share of the basis would be 1/3 * $60,000 = $20,000.
To calculate Steven's basis on March 1 just prior to the sale, we add the increase in basis from the income ($25,500) to the limited basis from the assets ($20,000). Therefore, Steven's basis in his partnership interest on March 1 is
$25,500 + $20,000 = $45,500.