Allison Is a 40% Partner in the BAM Partnership

question 202

Multiple Choice

Allison is a 40% partner in the BAM Partnership. At the beginning of the tax year, her basis in the partnership interest was $100,000, including her share of partnership liabilities. During the current year, BAM reported an ordinary loss of $60,000 (before the following payments to the partners) . In addition, BAM made an ordinary distribution of $8,000 to Allison and paid partner Brian a $20,000 consulting fee. At the end of the year, Allison's share of partnership liabilities decreased by $10,000. Assuming loss limitation rules do not apply, Allison's basis in the partnership interest at the end of the year is:

• A) $2,000.
• B) $50,000.
• C) $58,000.
• D) $70,000.

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Definitions:

Cost Of Goods Manufactured

The total expense incurred to produce goods within a specified period, including materials, labor, and overhead.