Problem 10-4

Partnership Formation (LO 10.2)

K&T Company is a partnership with two equal partners, Kai and Taonga. The partnership has income for the year of $60,000 before guaranteed payments. Guaranteed payments of $25,000 are paid to Kai during the year.

Calculate the amount of income that should be reported by Kai and Taonga from the partnership for the year.

Kai should report income of:	$____________
Taonga should report income of:	$____________

Problem 10-4 (Algorithmic) Partnership Formation (LO 10.2)

Elaine's original basis in the Hornbeam Partnership was $77,100. Her share of the taxable income from the partnership since she purchased the interest has been $308,400, and Elaine has received $231,300 in cash distributions from the partnership. Elaine did not recognize any gains as a result of the distributions. In the current year, Hornbeam also allocated $38,550 of tax-exempt interest to Elaine.

Calculate Elaine's current basis in her partnership interest. $

PLEASE SHOW ME HOW YOU GOT YOUR ANSWERS. THANKS!