The KL Partnership is owned equally by Kayla and Lisa
The KL Partnership is owned equally by Kayla and Lisa. Kayla’s basis is $20,000 at the beginning of the tax year. Lisa’s basis is $16,000 at the beginning of the year. Assume partnership debt did not change from the beginning to the end of the tax year. KL reported the following income and expenses for the current tax year:
Sales revenue ..................... $150,000
Cost of sales ...................... 80,000
Distribution to Lisa .................... 15,000
Depreciation expense................... 20,000
Utilities ........................ 14,000
Rent expense ...................... 18,000
Long-term capital gain .................. 6,000
Payment to Mercy Hospital for Kayla’s medical expenses ..... 12,000
a. Determine the ordinary partnership income and separately stated items for the partnership.
b. Calculate Kayla’s basis in her partnership interest at the end of the tax year. What items should Kayla report on her Federal income tax return?
c. Calculate Lisa’s basis in her partnership interest at the end of the tax year. What items should Lisa report on her Federal income tax return?
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