Reference no: EM132960978
Question - Due Limited Partnership was formed on February 1, 2019, with individuals Y and Z making the following contributions:
Y: Cash of $100,000
Z: Land with $100,000 fair market value and $80,000 basis
Y and Z share profits and losses equally. Due started business operations on February 1, 2019. The following current year's figures were prepared by Duo's controller, using the cash method of accounting. Y is a general partner and materially participates in business operations, and Z is a limited partner.
Gross Sales $700,000
Cost of goods sold 400,000
Salaries to employees 150,000
Payroll taxes for employees 10,000
Guaranteed payment to Y 51,000
Operating Expenses 150,000
Charitable contributions 20,000
Accounts payable 40,000
Nonrecourse debt 100,000
Legal fees (paid January 15, 2019, to write the partnership agreement) 2,000
Required - Calculate the following amounts (show your work).
a. Y's basis in the partnership at the end of 2019.
b. Z's basis in the partnership at the end of 2019.
c. Y's adjusted gross income if her only other source of income during 2019 is $10,000 interest.