Clark and Lewis Are Partners Who Share the Profits and Losses

question 42

Essay

Clark and Lewis are partners who share the profits and losses of the C&L Partnership 60% and 40%, respectively. The tax basis of each partner's interest in the partnership as of December 31 of last year was as follows: Clark, $14,000; Lewis, $12,000. During the current year, the partnership had ordinary income of $20,000 and a long-term capital loss of $10,000 from the sale of securities. The partnership made cash distributions proportionately to the two partners during this year totaling $20,000. What is the amount of Lewis's tax basis of his partnership interest on December 31 of the current year?

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Definitions:

Measure of Variability

Statistical indices that describe the spread or dispersion within a set of numerical data, including range, variance, and standard deviation.

Percentiles

Values below which a certain percentage of data in a data set fall.

Quartiles

The 25th, 50th, and 75th percentiles, referred to as the first quartile, the second quartile (median), and third quartile, respectively. The quartiles can be used to divide a data set into four parts, with each part containing approximately 25% of the data.

Frequently Occurring

Refers to events or values that appear or happen often within a given dataset or timeframe.