William and Joan form a partnership with William having a 30 percent interest and Joan the remaining

Question:

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 (before 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
New 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

Distribution
The word "distribution" has several meanings in the financial world, most of them pertaining to the payment of assets from a fund, account, or individual security to an investor or beneficiary. Retirement account distributions are among the most... Partnership
A legal form of business operation between two or more individuals who share management and profits. A Written agreement between two or more individuals who join as partners to form and carry on a for-profit business. Among other things, it states...

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