31. LO.2, 4, 5 Suzy contributed assets valued at $360,000 (basis of $200,000) in exchange for her 40% interest in Suz-Anna GP (a general partnership in which both partners are active owners). Anna contributed land and a building valued at $640,000 (basis of $380,000) in exchange for the remaining 60% interest.

Anna’s property was encumbered by qualified nonrecourse financing of $100,000, which was assumed by the partnership.

The partnership reports the following income and expenses for the current tax year.
Sales $560,000 Utilities, salaries, depreciation, other operating expenses 360,000 Short-term capital gain 10,000 Tax-exempt interest income 4,000 Charitable contributions (cash) 8,000 Distribution to Suzy 10,000 Distribution to Anna 20,000 At the end of the year, Suz-Anna held recourse debt of $100,000 for partnership accounts payable and qualified nonrecourse financing of $200,000.

a. What is Suzy’s basis in Suz-Anna after formation of the partnership? Anna’s basis?

b. What income and separately stated items does Suz-Anna report on Suzy’s Schedule K–1? What income deductions and taxes does Suzy report on her tax return?

c. All partnership debts are shared proportionately. At the end of the tax year, what are Suzy’s basis and amount at risk in her partnership interest?