Partner X is a 50% partner in the XY Partnership that has the following assets and liabilities at year end. Assume the book basis and tax basis are the same amount.
Machine: Basis $9,000 Value $21,000
Land: Basis $80,000 Value $100,000
Note 1: Basis $15,000 Value $15,000
Note 2: Basis $90,000 Value $90,000
Depreciation on the building was allocated one-third to X and two-thirds to Y. Both notes are nonrecourse. If partner X has a negative capital account of ($5,000) and Y has a negative capital account of ($10,000), how much of the partnership’s taxable income of $18,000 will be allocated to partner Y?