Question

At the beginning of the tax year, Barnaby's basis in the BBB Partnership was $151,800, including his $15,180 share of partnership debt. At the end of the tax year, his share of debt was $22,770. His share of the partnership's income for the year was $60,720, and he received cash distributions totaling $37,950. In addition, his share of the partnership's nontaxable income was $3,036. How much is Barnaby's basis at the end of the tax year

Answer 1

Answer: $185,196

Explanation:

To calculate Barnaby's basis at the end of the tax year, we do the following.

First we find out the Initial basis after excluding debt in this manner,

= Initial basis including debt - debt

= $151,800 - $15,180

= $136,620

Now that we have done that we then add the following,

= Initial basis after excluding debt + share of the partnership's income + share of debt + share of the partnership's nontaxable income

= $136,620 + $60,720 + $22,770 + $3,036

= $223,146

From this figure we will then subtract cash distributions received to find out his tax basis for the year.

= $223,146 - $37,950

= $185,196

Barnaby's basis at the end of the tax year is $185,196