Sharon and Sue Are Equal Partners in the S&S Partnership

question 204

Essay

Sharon and Sue are equal partners in the S&S Partnership. On January 1 of the current year, each partner's
adjusted basis in S&S was $80,000 (including each partner's $20,000 share of the partnership's $40,000 of liabilities). During the current year, S&S repaid $30,000 of the debt and borrowed $20,000 for which Sharon and Sue are
equally liable. In the current year ended December 31, S&S also sustained a net operating loss of $40,000 and earned $10,000 of interest income from investments. If liabilities are shared equally by the partners, on January 1 of the next year, how much is each partner's basis in her interest in S&S?

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Definitions:

Cyclohexylamine

An organic compound with the formula \(C_6H_{13}N\), characterized by a cyclohexane ring attached to an amine group.

Compound

A compound created when two or more elements combine chemically in specific ratios.

Benzoic Acid

A simple aromatic carboxylic acid with the formula C6H5COOH, used widely as a food preservative.

Methylamine

A simple organic compound consisting of a methyl group linked to an amine group, commonly used in organic synthesis.