Problem:
Rick has a $50,000 basis in the RKS General Partnership on January 1 of the current year, and he owns no other investments. He has a 20% capital interest, a 30% profits interest, and a 40% loss interest in the partnership. Rick does not work in the partnership. The partnership's only liability is a $100,000 nonrecourse debt borrowed several years ago, which remains outstanding at year-end. Rick's share of the liability is based on his profits interest and is included in his $50,000 partnership basis. Rick and the partnership each report on a calendar year basis.
Income for the entire partnership during the current year is:
Ordinary loss = $440,00
Long-term capital gain = $100,00
Please answer the following question:
Question 1: What is Rick's distributive share of income, gain, and loss for the current year?
Question 2: What partnership income, gain, and loss should Rick report on his tax return for the current year?
Question 3: What is Rick's basis in his partnership interest on the first day of the next year?
Note: Please provide equation and explain comprehensively and give step by step solution.