Ryan is a 25% partner in the ROCC Partnership. At the beginning of the tax year, Ryan's basis in the partnership interest was $90,000, including his share of partnership liabilities. During the current year, ROCC reported net ordinary income of $100,000 . In addition, ROCC distributed $10,000 to each of the partners ($40,000 total). At the end of the year, Ryan's share of partnership liabilities
increased by $10,000 . Ryan's basis in the partnership interest at the end of the year is:
a. $90,000.
b. $100,000.
c. $115,000.
d. $125,000.
c
RATIONALE: Ryan's $90,000 basis is increased by his $10,000 share of increased partnership liabilities and is decreased by the $10,000 distribution he received. His basis is also increased by his $25,000 share of partnership income ($100,000 × 25%).
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