aula purchases a 40% interest in Dancer Enterprises for $52,000 on January 2 of the current year. Dancer is organized as a partnership and has an income of $50,000 in the current year. Dancer also distributes a total of $15,000 to the partners in the current year.

Complete the statements below regarding the tax effects to Paula of her investment in Dancer.

Dancer Enterprises is a conduit entity and as such, does not pay tax on its income. Paula must include $ in her income. Based on all the distributions, Paula's adjusted basis in the partnership at the end of the current year is $.