Pass-Through of Income and Separately Stated Items. Damien
and Donna are equal partners in the DD Partnership. The passive activity loss,
at-risk, and excess business loss limitation rules are nor applicable ro the
partners. The partnership reports the following items on its Schedule K during
the current year:
Damien ‘s basis in his partnership interest is $80,000 at
the beginning of the current year. The DD Partnership’s liabilities increased
by $20,000 during the current year.
a. What amounts should Damien report on his individual tax
return as a result of DD Partnership’s activities?
b. What is Damien ‘s basis in his partnership interest after
raking into account the Schedule K items?
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