partnership interest at year-end is:
a. $36,000.
b. $38,000.
c. $60,000.
d. $70,000.
B
RATIONALE: Binita is a 20% partner and shares in 20% of the partnership’s taxable and tax-exempt income, or $8,000 . Her basis is reduced by the cash distribution during the year. Binita’s ending basis is calculated as follows: $40,000 beginning basis + $8,000 [20% × ($30,000 + $10,000)] – $10,000 distribution.