Sharon and Sue Are Equal Partners in the S&S Partnership

question 204

Essay

Sharon and Sue are equal partners in the S&S Partnership. On January 1 of the current year, each partner's
adjusted basis in S&S was $80,000 (including each partner's $20,000 share of the partnership's $40,000 of liabilities). During the current year, S&S repaid $30,000 of the debt and borrowed $20,000 for which Sharon and Sue are
equally liable. In the current year ended December 31, S&S also sustained a net operating loss of $40,000 and earned $10,000 of interest income from investments. If liabilities are shared equally by the partners, on January 1 of the next year, how much is each partner's basis in her interest in S&S?

---

Definitions:

Species' Song

A unique vocalization pattern or sound sequence that is characteristic of a particular species, often used in mating calls or territorial claims.

Throat Paralysis

A condition where muscles in the throat lose their ability to function, often affecting speech and swallowing.

Pigeons

Birds with stout bodies, short necks, and short slender bills, often associated with urban environments.

Habituation

The process of becoming accustomed to a stimulus after repeated exposure, often leading to a decrease in responsiveness.