Khushboos basis in her 30% interest in the Rishi Partnership is $46,000 at the start of the

Question:

Khushboo’s basis in her 30% interest in the Rishi Partnership is $46,000 at the start of the current year. During the current year, Rishi reports ordinary business income of $70,000. Rishi also makes a $16,000 guaranteed payment and $10,000 cash distribution, both to Khushboo. How much income will Khushboo recognize from these transactions and what will Khushboo’s basis be at the end of the current year? 

a. Basis of $57,000 and income of $37,000 

b. Basis of $41,000 and income of $21,000 

c. Basis of $90,000 and income of $96,000 

d. Basis of $57,000 and income of $21,000 

e. Basis of $41,000 and income of $37,000

Partnership
A legal form of business operation between two or more individuals who share management and profits. A Written agreement between two or more individuals who join as partners to form and carry on a for-profit business. Among other things, it states...
Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question

Income Tax Fundamentals 2019

ISBN: 9781337703062

37th Edition

Authors: Gerald E. Whittenburg, Steven Gill

Question Posted: