Jerry, a Partner with 30% Capital and Profit Interest, Received

question 14

Multiple Choice

Jerry, a partner with 30% capital and profit interest, received his Schedule K-1 from Plush Pillows, LP. At the beginning of the year, Jerry's tax basis in his partnership interest was $50,000. His current year Schedule K-1 reported an ordinary loss of$15,000, long-term capital gain of $3,000, qualified dividends of $2,000, $500 ofnon-deductible expenses, a $10,000 cash contribution, and a reduction of $4,000 in his share of partnership debt. What is Jerry's adjusted basis in his partnership interest at the end of the year?

• A) $35,000.
• B) $45,500.
• C) $40,000.
• D) $49,500.

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Definitions:

Economic Growth

An increase in the production of goods and services in an economy over a period, typically reflected as a percentage increase in real GDP.

Doubling Inputs

When the quantities of all inputs used in the production process are increased by the same proportion.

Foreign Direct Investment

is an investment made by a firm or individual in one country in business interests in another country, in the form of either establishing business operations or acquiring business assets.

Foreign Portfolio Investment

Investment in financial assets from another country, such as stocks or bonds, without direct control over the businesses.