Wayne owns 60 percent and Larry owns 40 percent of the profits and losses of the WL partnership On January 1, 20X4, the basis in their respective partnership interests is $60,000 and $10,000 During 20X4, WL reports taxable ordinary income of $50,000 and has the following separately stated items qua...

The basis of partners is increased by their distributive share of the partnership items ...

Wayne owns 60 percent and Larry owns 40 percent of the profits and losses of the WL

Question:

Wayne owns 60 percent and Larry owns 40 percent of the profits and losses of the WL On January 1, 20X4, the basis in their respective interests is $60,000 and $10,000. During 20X4, WL reports taxable ordinary income of $50,000 and has the following separately stated items: qualified income of $1,000; taxable interest income of $2,600; charitable contributions of $3,000; and Sec. 179 expense of $20,000. During the year, liabilities decreased by $25,000 and there were no distributions made to either partner (assume liabilities are allocated based on profit and loss sharing ratios). On December 31, 20X4, which of the following correctly states the basis in each partner's interest in WL?
a. Wayne: $63,360 and Larry: $12,240
b. Wayne: $65,520 and Larry: $12,680
c. Wayne: $90,360 and Larry: $30,240
d. Wayne: $92,160 and Larry: $31,440
Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their... 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...