Reference no: EM133022884

Question - The AB partnership, a cash method, calendar year partnership, had the following income and expenses for the past calendar year. A and B are equal partners.

Revenue from business operations $130

Ordinary operating business expenses 40

Depreciation on machinery 30

Charitable gifts 20

Gain on sale of business equipment

$20 is ordinary income under Sec. 1245

$10 is Sec. 1231 gain 30

Short-term capital gain on stock sale 10

Interest on tax-exempt bonds 40

Dividends received on stock 20

Gain on sale of land held for investment

For 4 years 100

a. What is the amount of ordinary income for the partnership?

b. What is the net income of the partnership that would appear in the Analysis of Net Income on Page 5, Line 1 of Form 1065?

c. A's adjusted basis for his partnership interest was $20 at the beginning of this partnership tax year. On March 1 the partnership distributed $40 to A. What would A's adjusted basis be at the end of the year?