Jerry, a Partner with 30 Percent Capital and Profits Interest

question 76

Multiple Choice

Jerry, a partner with 30 percent capital and profits 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 $49,000. His current-year Schedule K-1 reported an ordinary loss of $14,000, long-term capital gain of $4,100, qualified dividends of $3,100, $1,600 of non-deductible expenses, a $21,000 cash contribution, and a reduction of $5,100 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) $42,200
• C) $56,500
• D) $61,600

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Definitions:

Cash Inflows

The total amount of money being received by a company, from operations, investments, and financing activities.

Operating Activities

Transactions and events that affect the net income of a business.

Investing Activities

Deals related to buying and selling assets with a long-term horizon and different kinds of investments, excluding those similar to cash.

Stockholders' Equity

The residual interest in the assets of a corporation that remains after deducting its liabilities, essentially representing the ownership equity held by stockholders.