After a mere six years of blood, sweat and tears, you made partner in your accounting firm, Smart & Smarter, LLP. You made your initial capital contribution of $250,000 on January 1, Year A, and in exchange received a .4% equity inter-est in the partnership. Here are some additional facts: Smart & Smarter’s Year A partnership return, Form 1065, reported ordin-ary business income of $160,096,336. Smart & Smarter distributed an ag-gregate total of $142,834,019 cash to its partners during the year. Smart & Smarter’s Year B Form 1065 reported ordinary business income of $180,440,025. Smart & Smarter distributed an aggregate total of $165,316,650 cash to its partners during the year. Oops! Smart & Smarter’s Year C Form 1065 reported a net operating loss of $22,090,046. Nevertheless, Smart & Smarter distributed an aggregate total of $126,960,260 cash to its partners during the year. If all allocations and distributions from Smart & Smarter to its partners during or for those three years were pro rata, what is your adjusted basis in your partner-ship interest at January 1, Year D? Note: Round all number-crunching results to the nearest dollar.

You can figure the adjusted basis of your partnership interest by adding items that increase your…

Answered: If all allocations and distributions…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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After a mere six years of blood, sweat and tears, you made partner in your accounting firm, Smart & Smarter, LLP. You made your initial capital contribution of $250,000 on January 1, Year A, and in exchange received a .4% equity inter-est in the partnership. Here are some additional facts:

Smart & Smarter’s Year A partnership return, Form 1065, reported ordin-ary business income of $160,096,336. Smart & Smarter distributed an ag-gregate total of $142,834,019 cash to its partners during the year.

Smart & Smarter’s Year B Form 1065 reported ordinary business income of $180,440,025. Smart & Smarter distributed an aggregate total of $165,316,650 cash to its partners during the year.

Oops! Smart & Smarter’s Year C Form 1065 reported a net operating loss of $22,090,046. Nevertheless, Smart & Smarter distributed an aggregate total of $126,960,260 cash to its partners during the year.

If all allocations and distributions from Smart & Smarter to its partners during or for those three years were pro rata, what is your adjusted basis in your partner-ship interest at January 1, Year D?

Note: Round all number-crunching results to the nearest dollar.

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