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Homework answers / question archive / Michelle and Jacob formed the MJ Partnership at the beginning of the current tax year
Michelle and Jacob formed the MJ Partnership at the beginning of the current tax year. Michelle paid $25,000 for her 50% interest in the partnership capital and profits. During the first year of partnership operations: the partnership reported ordinary income of $20,000; Michelle received a distribution of $12,000 from the partnership; and she had a 50% share in the $18,000 of partnership recourse liabilities on the last day of the partnership year. What is Michelle’s basis for her partnership interest at year-end?
Group of answer choices
49,000
32,000
25,000
44,000
Michelle's Basis for her partnership interest at year ended
| Cash Contribution | $ 25,000 |
| Add: Share of ordinary income | $ 10,000 |
| (20,000 x 50% ) | |
| Less: Distribution received | $ 12,000 |
| Add: Share of recourse laibilities | $ 9,000 |
| ( 18,000 x 50% ) | |
| Basis at year end | $ 32,000 |
answer is option B 32000
