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