Higlo Paints Is a Partnership That Reports an Operating Income

question 92

Multiple Choice

Higlo Paints is a partnership that reports an operating income of $50,000 in the current year. Higlo also has a $20,000 Section 1231 gain from the sale of a building and $10,000 in nondeductible expenses. Bernice owns 20% of Higlo and withdraws $5,000 from the partnership during the current year. Bernice's basis will increase by:

• A)$5,000
• B)$7,000
• C)$9,000
• D)$10,000
• E)$12,000

---

Definitions:

Vigor

Physical strength, good health, or energy often exhibited through robust activity.

Nomothetic

Refers to the approach in psychology that aims to study what we share with others, focusing on general laws or principles that apply to all people.

Mechanistic

A view or theory that regards complex processes as being governed by simple physical or chemical principles, often compared to the workings of a machine.

Cognitive

Related to the processes of thinking, understanding, learning, and remembering.