Question

Question Mode Multiple Choice Question Victoria contributes cash of $20,000 in exchange for a partnership interest. In the first year, her share of dividends, tax-exempt income and ordinary business loss are $2,000, $1,000 and ($4,000), respectively. The partnership also makes a cash distribution to her of $10,000. What is Victoria's adjusted basis at the end of the year

Answer 1

$9,000

Step-by-step explanation:

Calculation for the adjusted basis at the end of the year

Using this formula

Adjusted basis=Cash+Dividend+Tax-exempt Income - Cash contribution-ordinary business loss

Let plug in the formula

Adjusted basis=20,000 + 2,000 + 1,000 – 10,000 – 4,000

Adjusted basis=$9,000

Therefore Victoria's adjusted basis at the end of the year will be $9,000