Clark and Lewis Are Partners Who Share the Profits and Losses

question 42

Essay

Clark and Lewis are partners who share the profits and losses of the C&L Partnership 60% and 40%, respectively. The tax basis of each partner's interest in the partnership as of December 31 of last year was as follows: Clark, $14,000; Lewis, $12,000. During the current year, the partnership had ordinary income of $20,000 and a long-term capital loss of $10,000 from the sale of securities. The partnership made cash distributions proportionately to the two partners during this year totaling $20,000. What is the amount of Lewis's tax basis of his partnership interest on December 31 of the current year?

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Definitions:

Epi-

Refers to being above, over, or on top of something, often used as a prefix in medical and biological terms to denote a higher position or an outer layer.

Tachy-

A prefix meaning "fast" or "swift," used in medical terminology to denote an abnormally rapid state, such as in "tachycardia" for rapid heartbeat.

Pan-

A prefix meaning "all" or "every," indicating inclusiveness or a wide scope in various fields.

Myocarditis

Inflammation of the heart muscle, often due to viral infections, leading to heart dysfunction.