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Zelda owns a 60 percent general interest in YZ Partnership. At the beginning of 2020, the adjusted basis in her YZ interest was $95,000. For
Zelda owns a 60 percent general interest in YZ Partnership. At the beginning of 2020, the adjusted basis in her YZ interest was $95,000. For 2020, YZ generated a $210,000 business loss, earned $14,600 dividend and interest income on its investments, and recognized a $6,200 capital gain. YZ made no distributions to its partners and had no debt. In 2021, YZ generated $7,000 ordinary business income and $18,000 dividend and interest income. The partnership made no distributions. At the end of the year, YZ had $21,000 debt.
Required:
- How much partnership income will Zelda report on her 2021 return? Assume the excess business loss limitation does not apply.
- Compute Zeldas adjusted basis in her YZ interest at the end of 2021.
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