Alpha and Bravo were equal partners in the CDE Partnership, a marketing consulting company. At start-up of the CDE Partnership on January 1, Year 1, Alpha and Bravo each contributed $50,000 in cash. A list of Year 1 activity for CDE Partnership is provided below.

1. Make a table to determine Alpha's tax (inside) basis in her partnership interest at the end of Year 1. Not all items may be needed for the determination. For any item not needed, enter a zero (0). Enter increases in tax basis as positive amounts and decreases in tax basis as negative amounts. 2. Determine Alpha's year end outside basis in the partnership. 3. Determine Alpha's ending basis in the company if the entity was taxed as an S-Corporation.

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CDE Partnership Year 1 Activity Activity Initial cash contributions (each) Ordinary business income (as reported on the partnership tax return Schedule K) Interest Income Life insurance premiums paid on lives of partners (partnership is beneficiary) Penalties paid for late payment of payroll taxes Guaranteed payment to Alpha Additional cash contributions (each) Cash distributions (each) Purchase of land for investment Signed note payable for acquisition of land Amount $50,000 $46,000 $1,400 $800 $200 $10,000 $15,000 $2,000 $6,000 $6,000 CDE Partnership Year 1 Activity Activity Initial cash contributions (each) Ordinary business income (as reported on the partnership tax return Schedule K) Interest Income Life insurance premiums paid on lives of partners (partnership is beneficiary) Penalties paid for late payment of payroll taxes Guaranteed payment to Alpha Additional cash contributions (each) Cash distributions (each) Purchase of land for investment Signed note payable for acquisition of land Amount $50,000 $46,000 $1,400 $800 $200 $10,000 $15,000 $2,000 $6,000 $6,000

Answer rating: 100% (QA)

Alphas Tax Inside Basis in CDE Partnership Activity Description Amount Tax Basis Impact Initial cash ... View the full answer