The KL Partnership is owned equally by Kayla and Lisa. Kayla's basis is $20,000 at the beginning of the tax year. Lisa's basis is $16,000 at the beginning of the year. Assume that partnership debt did not change from the beginning to the end of the tax year. KL reported the following income and expenses for the current tax year:

Sales revenue	$100,000
Cost of sales	80,000
Distribution to Lisa	15,000
Depreciation expense	20,000
Utilities	14,000
Rent expense	18,000
Long-term capital gain	6,000
Payment to Mercy Hospital for Kayla's medical expenses	12,000

If an amount is zero, enter "0".

a. Determine the ordinary partnership income and separately stated items for the partnership.

The partnership's loss is $. The separately stated income items total $.

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The measurement and reporting of partnership income require a two-step approach. Certain items must be netted at the partnership level, and other items must be segregated and reported separately on the partnership return and each partner's Schedule K-1.

b. Calculate Kaylas basis in her partnership interest at the end of the tax year. What items should Kayla report on her Federal income tax return?

Kayla's basis in her partnership interest at the end of the tax year is $. She reports the following items on her Federal income tax return: Share of loss and long-term capital gain

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Partially correct

c. Calculate Lisas basis in her partnership interest at the end of the tax year. What items should Lisa report on her Federal income tax return?

Lisa's basis in her partnership interest at the end of the tax year is $. She reports the following items on her Federal income tax return: Share of loss and long-term capital gain