Jack is a 20% partner in a service partnership. His outside basis is $80,000 on January 1st
Question:
Jack is a 20% partner in a service partnership. His outside basis is $80,000 on January 1st of 2021. Included in that amount is a $15,000 share of partnership liabilities.
During the year, Jack is allocated the following amounts:
Long-term capital gain: $2,000
Ordinary income of the partnership: $10,000
A guaranteed payment: $60,000
At the end of the year, the partnership relieves him of $5,000 of partnership liabilities and gives him a cash distribution of $40,000. These payments are intended as a partial liquidation of his partnership interest.
a. What is the amount of Jack's outside basis after all of these events?
b. What is the amount of Jack's capital account after all of these events?
Discovering Advanced Algebra An Investigative Approach
ISBN: 978-1559539845
1st edition
Authors: Jerald Murdock, Ellen Kamischke, Eric Kamischke