Marina and Nolan formed the MN Partnership. Marina contributed $20,000 of cash in exchange for her 50% interest in the partnership capital and profits. During the first year of partnership operations, the following events occurred: the partnership had a net taxable income of $10,000; Marina received a distribution of $8,000 cash from the partnership; and Marina had a 50% share in the partnership's $16,000 of recourse liabilities on the last day of the partnership year. Marina's adjusted basis for her partnership interest at year-end is:

A) $25,000.

Explanation:

Marina's adjusted basis for her partnership interest at the end of the year = $20,000 (Marina's cash contribution) + $5,000 (Marina's share in the partnership's net taxable income) - $8,000 (distributions received by Marina) + $8,000 (Marina's share in the partnership's recourse liabilities) = $25,000

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