Question
Kasinda is a partner in Twins Partnership. At January 1, 2015, her 25% partnership interest has an adjusted cost base of $35,000. During 2015, she
Kasinda is a partner in Twins Partnership. At January 1, 2015, her 25% partnership interest has an adjusted cost base of $35,000. During 2015, she withdraws $85,000 from the partnership. During 2015, the partnership has business income for tax purposes of $400,000. What is her adjusted cost base on December 31, 2015, and what tax consequences will result from the transactions during the year?
| The adjusted cost base on December 31, 2015 is nil. Because Kasinda has withdrawn more than her adjusted cost base from the partnership, she will report a taxable capital gain of $25,000. Her partnership business income is $100,000. | ||
| The adjusted cost base on December 31, 2015 is $50,000. Kasinda will report partnership business income of $100,000. | ||
| The adjusted cost base on December 31, 2015 is nil. Kasinda will report partnership business income of $100,000. | ||
| The adjusted cost base on December 31, 2015 is negative $50,000. Because Kasinda has withdrawn more than her adjusted cost base from the partnership, she will report partnership business income of $50,000. |
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