3. William and Joan form a partnership with William having a 30 percent interest and Joan the...
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3. William and Joan form a partnership with William having a 30 percent interest and Joan the remaining 70 percent. Joan contributed $80,000 cash and services valued at $4,000. William contributed $6,000 cash and property valued at $30,000 that has a basis of $20,000. At the end of the year, the partnership reports the following:
Ordinary income (excluding guaranteed payments) $90,000 Tax-exempt bond interest 2,000 Capital loss 4,000 Guaranteed payment to Joan 30,000 Cash distribution to Joan 25,000 3-year note on land 15,000 What is William’s basis in his partnership interest at year-end?
a. $43,400
b. $45,800
c. $47,900
d. $45,900
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