H has beginning basis in his partnership interest of $500. During the year H is allocated $100 of partnership income, $500 of partnership losses, and receives a cash distribution of $400. What amount of distribution in excess of basis will H recognize, if any? Please explain how you get the answer A) $300 b) $0 C) $400 D) $600
Partnership Accounting
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings, admission of a new partner, etc.
Partner Admission and Withdrawal
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings of a partner, etc.
H has beginning basis in his partnership interest of $500. During the year H is allocated $100 of partnership income, $500 of partnership losses, and receives a cash distribution of $400. What amount of distribution in excess of basis will H recognize, if any? Please explain how you get the answer
A) $300
b) $0
C) $400
D) $600
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