An Examination of the RB Partnership's Tax Books Provides the Following

Essay

An examination of the RB Partnership's tax books provides the following information for the current year:
Rachel is a 30% general partner in partnership capital, profits, and losses. Assume the adjusted basis of her partnership interest is $60,000 at the beginning of the year, and she shares in 30% of the partnership's liabilities for basis purposes.
a. What is Rachel's adjusted basis for the partnership interest at the end of the year?
b. How much income must Rachel report on her tax return for the current year? What is the character of the income and what types of tax might apply to it?