Misty and John Formed the MJ Partnership

question 183

Multiple Choice

Misty and John formed the MJ Partnership. Misty contributed $50,000 of cash in exchange for her 50% interest in the partnership capital and profits. During the first year of partnership operations, the following events occurred: the partnership had a net taxable income of $20,000; Misty received a distribution of $12,000 cash from the partnership; and Misty had a 50% share in the partnership's $60,000 of recourse liabilities on the last day of the partnership year. Misty's adjusted basis for her partnership interest at year end is:

• A) $48,000.
• B) $60,000.
• C) $78,000.
• D) $88,000.
• E) $90,000.

---

Definitions:

Alternatives

Other options or choices available to individuals or parties, often considered in decision-making or negotiation.

Distributive process

A negotiation strategy concerned with the division and allocation of resources or benefits.

Integrative process

A negotiation strategy that seeks to find mutually beneficial solutions by integrating the interests and needs of all parties involved.

Interests and resources

Refers to the various desires, wants, or needs that individuals or groups pursue, along with the assets or capital at their disposal to achieve these ends.