What is each partners basis at year-end

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George and Georgenne formed the GG Partnership as equal partners. Each partner contributed cash and property with a value of $100,000 for partnership operations. As a result of these contributions, George had a basis of $80,000 and Georgenne a basis of $60,000 in their partnership interests. At the end of their first year of operations, they had the following results:

Gross sales

$150,000

Cost of goods sold

95,000

Rent

15,000

Salaries to employees

15,000

Utilities

4,000

Charitable contribution

1,000

Section 1231 gain

2,000

a. What is the net income, excluding separately stated items, that each partner is required to report at the end of the year?

b. How is each of the separately stated items treated on the partners' tax returns?

c. What is each partner's basis at year-end?

Reference no: EM13539853

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