Question

Mary is a 50% general partner in the WJM Partnership. The partnership's records for the current...

Mary is a 50% general partner in the WJM Partnership. The partnership's records for the current year show the following:

Gross receipts from sales   $670,000
Cost of sales   (500,000)
Advertising expense   (96,000)
Charitable contributions   (25,000)
Dividend income   48,000
Guaranteed payment to Mary   (12,000)
Short-term capital loss   (30,000)

Mary's outside basis at the beginning of the current year was $125,000. During the year, partnership liabilities decreased by $80,000 and the partnership made cash distributions to Mary of $55,000.
Required:
(a) Calculate the partnership's ordinary business income for the current year.
(b) Calculate Mary's outside basis as of the end of the current year.

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