At the end of year 1, Tony had a tax basis of $40,000 in Tall Ladders, Limited Partnership. Tony has a 20 percent share of the profits of Tall Ladders. For year 2, Tall Ladders will pay Tony a guaranteed payment of $10,000 for the additional services he provides to the partnership. Given the following income statement and balance sheet for Tall Ladders, what is Tony's adjusted tax basis at the end of year 2? (Show all work) (This is all income provided)

HIGH STAIRS, LP
	Statement of income year 2
	Sales	65,000
	COGS	(47,000	)
	Gross profit	18,000
	Interest income	3,000
	dividends	5,000
	long-term capital gain	10,000
	Other income	15,000
	Other Total Income	33,000
	MACRS Depreciation	(20,000	)
	Guaranteed Payments	(10,000	)
	charitable contribution	(10,000	)
	Fines and penalties	(4.500	)
	Other expenses	(8,500	)
	Total other expenses	(53,000	)
	Net income (loss)	(2,000	)

HIGH STAIRS, LP
Balance sheet
	Year 1	year 2
Assets	120,000	270.000
Non-recourse liabilities	50,000	180.000
Partner's Equity	70.000	90.000

Required

Calculate adjusted tax basis at the end of year 2

Answer rating: 100% (QA)

To calculate Tonys adjusted tax basis at the end of year 2 we need to first determi... View the full answer