PROBLEM A 5 POINTS PART 1 ALEJANDRA IS A 50 % PARTNER IN ABC LLC. FOR THE CUTTENT YEAR, THE PARTNERSHIP REPORTED TAXABLE INCOME OF $ 175,000.00 AND IT DISTRIBUTED $ 100,000.00 TO THE TWO PARTNERS ($ 50,000.00 EACH). WHAT IS THE OVERALL TAX EFFECT OF THIS TRANSACTION? PART II WHAT IF ABC LLC WAS TO BE TAXABLE AS A CORPORATION, WHAT WOULD BE THE OVERALL TAX EFFECT OF THIS TRANSACTION ? PROBLEM B PART I PATRICK HAS A 30% INTEREST IN A PARTNERSHIP THAT HAS ORDINARY INCOME OF $ 60,000.00 AND TAX EXEMPT INCOME OF $ 10,000.00 DURING THE YEAR. IF HIS BASIS IN THE PARTNERSHIP INTEREST AT THE BEGINNING OF THE YEAR WAS $ 200,000.00, WHAT WOULD BE PATRICK'S BASIS OF HIS PARTNERSHIP INTEREST AT THE END OF THE YEAR? 5 POINTS PART II ASSUME THAT NEXT YEAR THE PARTNERSHIP REPORTED A $ 70,000.00 LOSS AND A $ 20,000.00 NON DEDUCTIBLE EXPENSE, WHAT WOULD BE PATRICK'S BASIS OF HIS PARTNERSHIP INTEREST AT THE END OF NEXT YEAR?

PART 1 ALEJANDRA IS A 50% PARTNER IN ABC LLC. FOR THE CUTTENT YEAR, THE PARTNERSHIP REPORTED TAXABLE INCOME OF $175,000.00 AND IT DISTRIBUTED $100,000.00 TO THE TWO PARTNERS ( $50,000.00 EACH). WHAT IS THE OVERALL TAX EFFECT OF THIS TRANSACTION? PART II WHAT IF ABC LLC WAS TO BE TAXABLE AS A CORPORATION, WHAT WOULD BE THE OVERALL TAX EFFECT OF THIS TRANSACTION ? PROBLEM B PART I PATRICK HAS A 30\% INTEREST IN A PARTNERSHIP THAT HAS ORDINARY INCOME OF $60,000.00 AND TAX EXEMPT INCOME OF $10,000.00 DURING THE YEAR. IF HIS BASIS IN THE PARTNERSHIP INTEREST AT THE BEGINNING OF THE YEAR WAS $200,000.00, WHAT WOULD BE PATRICK'S BASIS OF HIS PARTNERSHIP INTEREST AT THE END OF THE YEAR? PART II ASSUME THAT NEXT YEAR THE PARTNERSHIP REPORTED A $70,000.00 LOSS AND A $20,000.00 NON DEDUCTIBLE EXPENSE, WHAT WOULD BE PATRICK'S BASIS OF HIS PARTNERSHIP INTEREST AT THE END OF NEXT YEAR