Kari is a partner in Lizard Partnership. This year, Karis share of partnership ordinary income is $20,000,

Question:

Kari is a partner in Lizard Partnership. This year, Kari’s share of partnership ordinary income is $20,000, and she received a cash distribution of $30,000. Kari’s tax basis in her partnership interest at the beginning of the year was $50,000. Her marginal tax rate is 22 percent. Kari qualifies for the Section 199A deduction, without regard to the wage limitation.

a. Calculate the tax cost of Kari’s partnership earnings this year.

b. Compute Kari’s after-tax cash flow from her partnership activity this year.

c. Compute Kari’s tax basis in her partnership interest at the ending of the year. Assume no change in her share of partnership liabilities during the year.

Distribution
The word "distribution" has several meanings in the financial world, most of them pertaining to the payment of assets from a fund, account, or individual security to an investor or beneficiary. Retirement account distributions are among the most... 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...

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