Richard Wilson owns a 20 percent interest in PCW partnership. At the beginning of 20X3, Richard's...

 

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Richard Wilson owns a 20 percent interest in PCW partnership. At the beginning of 20X3, Richard's basis in his partnership interest is $5,000. During 20X3, the PCW reports a $20,000 taxable income from its operations and also reports that it received $10,000 in tax-exempt interest income. PCW distributes $7,500 to Richard during 20X3 Which of the following statements is correct regarding the 20X3 tax year? Richard will include in his taxable income his distributive share of $6,000 from the total partnership income for 20X3. а. b. Richard will decrease the basis in his partnership interest by his distributive share of $2,000 from the partnerships tax-exempt interest. Richard's basis in his partnership interest is $11,000 prior to taking into account the $7,500 distribution. с. d. Richard will report as income the $1,500 excess distribution above his distributive share of the total partnership income for 20X3. Richard Wilson owns a 20 percent interest in PCW partnership. At the beginning of 20X3, Richard's basis in his partnership interest is $5,000. During 20X3, the PCW reports a $20,000 taxable income from its operations and also reports that it received $10,000 in tax-exempt interest income. PCW distributes $7,500 to Richard during 20X3 Which of the following statements is correct regarding the 20X3 tax year? Richard will include in his taxable income his distributive share of $6,000 from the total partnership income for 20X3. а. b. Richard will decrease the basis in his partnership interest by his distributive share of $2,000 from the partnerships tax-exempt interest. Richard's basis in his partnership interest is $11,000 prior to taking into account the $7,500 distribution. с. d. Richard will report as income the $1,500 excess distribution above his distributive share of the total partnership income for 20X3.

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