At the End of Year 1,Tony Had a Tax Basis

question 80

Essay

At the end of year 1,Tony had a tax basis of $40,000 in Tall Ladders,Limited Partnership.Tony has a 20 percent profits interest in Tall Ladders.For year 2,Tall Ladders will pay Tony a $10,000 guaranteed payment for extra services he provides to the partnership.Given the following Income Statement and Balance Sheet from Tall Ladders,what is Tony's adjusted tax basis at the end of year 2?
$\begin{array}{l}\begin{array}{lcl}&\text {TALL LADDERS, LP}\\&\text {Income Statement}\\&\text {Year 2}\\\text {Sales}&\\\text {COGS}&\\\text {Gross Profit}&\\\text {Interest Income}&\\\text {Dividends}&\\\text {Long Term Capital Gain}&\\\text {Other Income}&\\\text {Total Other Income}&\\\text {MACRS Depreciation}&\\\text {Guaranteed Payments}&\\\text {Charitable Contribution}&\\\text {Fines and Penalties}&\\\text {Other Expenses}&\\\text {Total other Expenses}&\\\text {Net Income (Loss)}&\\\end{array}\begin{array}{lll}\\\\\\65,000\\47,000\\18,000\\ 3,000\\5,000\\10,006\\33000\\20,000\\10,000\\10,000 \\4,500 \\8,500 \\53,000 \\2,000 \\\end{array}\end{array}$

$\begin{array}{lcr}&\text { TALL LADDERS, LP}\\&\text { Balance Sheet}\\&&\text { Year 1 } & \text { Year 2 } \\ \text { Assets}&&120,000& 270,000 \\ \text { Nonrecourse Liabilities }&&50,000 & 180,000 \\ \text { Partner's Capital}&&70,000 & 90,000\end{array}$

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