Final answer:
Mustafa's tax basis at the end of the year is calculated by adding the initial tax basis to the increase in partnership liabilities and the share of partnership income, resulting in a new tax basis of $23,500.
Step-by-step explanation:
The student asked how to calculate Mustafa's tax basis in his partnership interest at the end of the year. Mustafa's tax basis at the beginning of the year was $13,500. During the year, his share of the partnership liabilities increased by $8,500, and his share of the partnership income was $1,500.
To find the tax basis at the end of the year, we sum these amounts: $13,500 (initial tax basis) + $8,500 (increase in liabilities) + $1,500 (partnership income) = $23,500. Therefore, Mustafa's tax basis in the partnership interest at the end of the year is $23,500.
Mustafa's tax basis in his partnership interest at the beginning of the year was $13,500. When his share of partnership liabilities increased by $8,500 during the year, his tax basis increased to $22,000 ($13,500 + $8,500). Finally, when his share of partnership income for the year is $1,500, we subtract the income from his tax basis. So, his tax basis in his partnership interest at the end of the year would be $20,500 ($22,000 - $1,500).