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Wanda is a 20 percent owner of Video Associates, which istreated as a passthrough entity for federal income tax purposes.This year, Wanda was allocated $45,000 of ordinary income fromVideo Associates, $1,000 of tax-exempt interest income, and $2,000of nondeductible expenses. Wanda also received a $10,000distribution from Video Associates this year. At the beginning ofthe year, Video Associates had outstanding debt of $100,000. At theend of the year, the entity’s outstanding debts increased to$130,000.

If Video Associates is a partnership, and her basis in herpartnership interest at the beginning of the year is $30,000,determine Wanda’s tax basis in her partnership interest atyear-end.

If Video Associates is an S corporation, and her basis in her Scorporation stock at the beginning of the year is $10,000,determine Wanda’s tax basis in her corporate stock at year-end.

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Nelly Stracke
Nelly StrackeLv2
28 Sep 2019

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The KL Partnership is owned equally by Kayla and Lisa. Kayla’sbasis is $20,000 at the beginning of the tax year. Lisa’s basis is$16,000 at the beginning of the year. Assume partnership debt didnot change from the beginning to the end of the tax year. KLreported the following income and expenses for the current taxyear:
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