What is Binita's adjusted basis for her partnership interest at year-end after receiving a cash distribution?

To determine Binita's adjusted basis for her partnership interest after receiving a cash distribution, it's essential to consider how the basis is calculated for partnership interests. The adjusted basis generally starts with the initial investment, including any additional contributions and income allocated to the partner, then adjustments are made for distributions, losses, and other factors.

In this scenario, if Binita's adjusted basis before the distribution was, for example, $38,000 and she received a cash distribution, then the cash would reduce her basis. If the cash distribution is less than her basis, her adjusted basis after the distribution would simply be reduced by the cash amount received. This results in a new basis that reflects her remaining investment in the partnership after taking the distribution into account.

If the given answer is $38,000, it indicates the amount of her adjusted basis after considering all relevant adjustments, including prior contributions, earnings, and the distribution she received. This amount would be calculated net of the cash distributed to her and is likely aligned with various factors that would lead to this specific figure, such as partnership income and distributions over time.

Understanding how to adjust a partner's basis, especially in relation to cash distributions, is a fundamental concept in partnership taxation, and accurately calculating this helps