Question

8. Zelda owns a 50% general interest in YZ Partnership. At the beginning of the current year, the adjusted basis in her partnership interest was $95,000. In the current year, YZ generated a $110,000 business loss, earned $15,000 dividend and interest income on its investments and recognized a $7,000 capital gain. YZ also made a $5,000 distribution to Zelda. Compute Zelda’s adjusted basis in the partnership at the end of the year.

Answer 1

Answer:

$52,500

Explanation:

Computation for Zelda’s adjusted basis in the partnership at the end of the year.

Zelda’s adjusted basis=$95,000-(50%*$110,000)+(50%*$15,000)+$5,000

Zelda’s adjusted basis=$95,000-$55,000+$7,500+$5,000

Zelda’s adjusted basis= $52,500

Based on the information given we assumed 50% because Zelda is a 50% partner.

Therefore Zelda’s adjusted basis in the partnership at the end of the year will be $52,500