Question :

Margaret's adjusted basis in her 50 % interest in MP Partnership, a common partnership, was $10,000. During 2012, Margaret did not create any additional contributions to MP Partnership, and Margaret's share of MP Partnership liabilities did not modify. During 2012, MP Partnership distributed $5,000 to Margaret, and MP Partnership had the subsequent items of partnership income, deduction, profit and loss for 2012:

Separately stated taxable income $30,000

Tax-exempt interest      $10,000

Capital loss          ($20,000)

Determine Margaret's adjusted basis in her partnership interest in MP Partnership at the end of 2012?

a. 0.

b. $10,000.

c. $15,000.

d. $25,000.