Damien and Donna are equal partners in the DD Partnership. The passive activity loss and the at-risk rules are not applicable to the partners. The partnership reports the following items on its Schedule K during the current year:
Ordinary loss.........................................................$10,000
Long-term capital gains..........................................40,000
Research and experimentation credit....................4,000
AMT tax preference items........................................6,000
Distribution to the partners...................................25,000
Damien’s basis in his partnership interest is $80,000 at the beginning of the current year. The DD Partnership’s liabilities increased by $20,000 during the current year.
a. What amounts should Damien report on his individual tax return as a result of DD Partnership’s activities?
b. What is Damien’s basis in his partnership interest after taking into account the Schedule K items?