Alfred, a 33% profits and capital partner in Pizzeria Partnership, needs help in adjusting his tax basis to reflect the information contained in his most recent Schedule K-1 from the partnership. Unfortunately, the Schedule K-1 he recently received was for year 3 of the partnership, but Alfred only knows that his tax basis at the beginning of year 2 of the partnership was $23,000. Thankfully, Alfred still has his Schedule K-1 from the partnership for years 1 and 2.Using the following information from Alfred's year 1, year 2, and year 3 Schedule K-1, calculate his tax basis the end of year 2 and year3.

Transcribed Image Text:

Year 1: Ordinary business income Cash distribution Alfred's share of partnership debt Guaranteed payment Nondeductible expense Tax-exempt income $10,000 $7,000 S85,000 (S4,500) (S1,000) $1,200 Year 2 rdinary business loss Cash contribution Alfred's share of partnership debt Guaranteed payment Nondeductible expense Tax-exempt income (S5,000) $10,000 $73,000 (S7,500) (S3,000) $1,500 Year 3 Ordinary business loss Alfred's share of partnership debt Nondeductible expenses Guaranteed payment ($13,000) S58,000 (S3,000) (S7,500)