Jean and Mary each have a 50 interest in JM Partnership The

Jean and Mary each have a 50% interest in JM Partnership The partnership and the partners all file calendar year tax returns. For the Year 1 tax year return, JM Partnership had a $22,000 loss. Jean\'s adjusted basis in her partnership interest on January 1. Year 1, was $5,000. JM Partnership reported a $25,000 gain on its Year 2 tax year return. There are no other adjustments to Jean\'s basis in the partnership for Year 1 or Year 2. There were no distributions to the partners in either year. What is the amount of partnership income (loss) that Jean will show on her Year 2 individual Form 1040? A. $6,500 B. $1,500 C. $12,500 ianet Select the best answer

Solution

PARTNERSHIP RESULT SHARE OF JEAN YEAR 1 -22000 -11000 YEAR 2 25000 12500 NET GAIN 1500 IN YEAR 2 JEAN WILL SHOW IN INDIVIDUAL TAX RETURN GAIN OF 12500 FROM PARTNERSHIP