What is a basis in the partnership on december

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Question - Partnership A-B's profits and losses are shared equally between the two partners. The adjusted basis of Partner A's interest in the partnership on December 31, Year 1, was $10,000. On January 2, Year 2, Partner A withdrew $8,000 cash. The partnership reported $40,000 as ordinary income on its Year 2 partnership return. In addition, a separately stated $5,000 amount for travel, meals, and entertainment was shown on a Form 1065, Schedule K-1, for Partner A. The $5,000 meets the business expense requirement but is limited to a $2,500 deduction, resulting in a $2,500 unallowable deduction. What is A's basis in the partnership on December 31, Year 2?

A. $27,500

B. $22,000

C. $17,000

D. $19,500

Reference no: EM133095498

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