Maurice, Lawrence, and Kerwin own and operate a chain of sandwich shops as a partnership. Maurice owns

Question:

Maurice, Lawrence, and Kerwin own and operate a chain of sandwich shops as a partnership. Maurice owns 40%, and his basis in the partnership is $80,000. Lawrence, a 35% owner, has a basis of $50,000, and Kerwin, who owns 25%, has a basis in the partnership of $15,000. What are the tax consequences and basis effects for each partner if the partnership’s ordinary income is $70,000 and each receives a cash distribution of $30,000?

Distribution
The word "distribution" has several meanings in the financial world, most of them pertaining to the payment of assets from a fund, account, or individual security to an investor or beneficiary. Retirement account distributions are among the most... Partnership
A legal form of business operation between two or more individuals who share management and profits. A Written agreement between two or more individuals who join as partners to form and carry on a for-profit business. Among other things, it states...