Jack is a 20% partner in a service partnership. His outside basis is $80,000 on January 1st of 2021. Included in that amount is a $15,000 share of partnership liabilities.

During the year, Jack is allocated the following amounts:

Long-term capital gain: $2,000

Ordinary income of the partnership: $10,000

A guaranteed payment: $60,000

At the end of the year, the partnership relieves him of $5,000 of partnership liabilities and gives him a cash distribution of $40,000. These payments are intended as a partial liquidation of his partnership interest.

a. What is the amount of Jack's outside basis after all of these events?

b. What is the amount of Jack's capital account after all of these events?

Answer rating: 100% (QA)

Quiz a The amount of Jacks outside basis after all of these events is 55000 Jacks outside basis is 8... View the full answer