Misty and John Formed the MJ Partnership

question 183

Multiple Choice

Misty and John formed the MJ Partnership. Misty contributed $50,000 of cash in exchange for her 50% interest in the partnership capital and profits. During the first year of partnership operations, the following events occurred: the partnership had a net taxable income of $20,000; Misty received a distribution of $12,000 cash from the partnership; and Misty had a 50% share in the partnership's $60,000 of recourse liabilities on the last day of the partnership year. Misty's adjusted basis for her partnership interest at year end is:

• A) $48,000.
• B) $60,000.
• C) $78,000.
• D) $88,000.
• E) $90,000.

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Definitions:

Assets

Resources owned or controlled by a person or entity that are expected to produce value or economic benefit in the future.

Balance Of Payments

A statement that summarizes a country’s transactions with the rest of the world, including trade, financial transfers, and investments.

Negative Balance

A situation in financial accounts where the amount spent exceeds the amount available or deposited.

Euro

The common currency in most of Western Europe.