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:

Neuroadaptation

The process by which the brain adapts to the effects of a drug or stimulus with continued exposure, leading to a reduction in sensitivity.

Tolerance

The capacity to accept or endure someone or something different from one's own beliefs, habits, or practice without interference.

Depressant Drugs

Substances that reduce arousal and stimulation in the brain, leading to a calming effect.

Barbiturates

Are a class of drugs that act as central nervous system depressants, used primarily as sedatives or to control seizures.