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W is a partner in the equal WXYZ partnership. At the beginning of the year, his...

W is a partner in the equal WXYZ partnership. At the beginning of the year, his basis in his partnership interest is $50,000. On Jan. 15, W takes a draw against earnings of $45,000. On June 1, the partnership pays off $50,000 of debt. On Sept. 1, W gets a distribution of cash of $35,000 that is a draw against earnings. The partnership’s income from the year is $250,000. What is the effect of each of these items on W’s basis

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Answer #1
Answer :
The $45000 drawn against earnings and $12500 share of reduction in liabilities are treated as distribution on last day of taxable year.
The $45000 distribution of cash would reduce W's basis in the partnership to $5000.
W's share of the income of partnership would increase his basis by $62500 (250000/4)   to $67500
The $45000 drawn against earnings and W's $12500 share of reduction in liabilities would reduce his basis to $ 32500
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