Question

Elaine's original basis in the Hornbeam Partnership was $30,000. Her share of the taxable income from the partnership since she purchased the interest has been $90,000, and Elaine has received $80,000 in cash distributions from the partnership. Elaine did not recognize any gains as a result of the distributions.

Calculate Elaine's current basis in her partnership interest.

Answer 1

$40,000

Step-by-step explanation:

From the question above Elaine's original basis in the Hornbeam Partnership is $30,000

Her share of the taxable income is from the partnership is $90,000

Elaine has received $80,000 in cash distribution from the partnership

Therefore, Elaine's current basis in her partnership interest can be calculated as follows

Current basis= [Original basis + ( Share of taxable income-Cash distribution)

= $30,000+($90,000-$80,000)

= $30,000+$10,000

= $40,000

Hence Elaine's current basis in her partnership interest is $40,000