Ruby's Tax Basis in Her Partnership Interest at the Beginning

question 17

Essay

Ruby's tax basis in her partnership interest at the beginning of the partnership's tax year was $13,500. The following items were included in her Schedule K-1 from the partnership for the year:
Determine what amounts related to these items Ruby will report on her tax return assuming her tax basis and at-risk amount are equal and that she is a material participant in the partnership's activities. Further, assume that Ruby and her husband, Gerald, are not involved in any other trade or business and that they file a joint return every year.

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Definitions:

Warrants

Financial derivatives that give the holder the right, but not the obligation, to buy or sell a security at a specific price before a certain date.

Earnings Per Share

A company's profit divided by the number of outstanding shares of its common stock, indicating profitability.

Total Equity

The total of all ownership interests in a company, calculated as the difference between total assets and total liabilities; also known as shareholders' equity or owner's equity.

Bonds Outstanding

Bonds outstanding are the total amount of bonds issued by a company that are not yet redeemed and are currently held by investors.