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Kanye West, a partner with 33% profit interest, received his Schedule K-1 from Stronger LLP. At...

Kanye West, a partner with 33% profit interest, received his Schedule K-1 from Stronger LLP. At the beginning of the year, West’s tax basis in his partnership interest was $120,000. His current year Schedule K-1 reported an ordinary loss of $115,000, long-term capital gain of $15,000, qualified dividends of $35,000, $75,000 of non-deductible expenses, a $25,000 cash contribution, and a reduction of $50,000 in his share of partnership debt. What is West’s adjusted basis in Stronger LLP at the end of the year?

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Answer #1
Particulars Amount
Beginning basis             120,000
Ordinary loss            (115,000)
LTCG 15000
Dividends                35,000
Expenses              (75,000)
Contribution                25,000
Reduction in debt              (50,000)
Ending basis              (45,000)

Ending adjusted basis is $0. It cannot be negative.

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