In Year 1 you invested $500,000 in exchange for a 15% partnership interest in ABC, LP. Here are some additional facts: Year 1: ABC had ordinary business income of $3.4 million for the year; it had no other categories of income or deductible expense; during Year 1 you received a cash distribution from ABC of $400,000. Year 2: ABC had ordinary business income of $4.6 million for the year; it had no other categories of income or deductible expense; during Year 2 you received a cash distribution from ABC of $500,000. Year 3: ABC had ordinary business income of $1.8 million for the year; it had no other categories of income or deductible expense; during Year 3 you received a cash distribution from ABC of $450,000. Year 4: ABC had an ordinary business loss of $2.75 million for the year; it had no other categories of income or deductible expense; during Year 4 you received no cash distributions from ABC but did make a $125,000 additional capital contribution.
In Year 1 you invested $500,000 in exchange for a 15% partnership interest in ABC, LP. Here are some additional facts: Year 1: ABC had ordinary business income of $3.4 million for the year; it had no other categories of income or deductible expense; during Year 1 you received a cash distribution from ABC of $400,000. Year 2: ABC had ordinary business income of $4.6 million for the year; it had no other categories of income or deductible expense; during Year 2 you received a cash distribution from ABC of $500,000. Year 3: ABC had ordinary business income of $1.8 million for the year; it had no other categories of income or deductible expense; during Year 3 you received a cash distribution from ABC of $450,000. Year 4: ABC had an ordinary business loss of $2.75 million for the year; it had no other categories of income or deductible expense; during Year 4 you received no cash distributions from ABC but did make a $125,000 additional capital contribution.
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter6: Accounting For Financial Management
Section: Chapter Questions
Problem 8P
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In Year 1 you invested $500,000 in exchange for a 15% partnership interest in ABC, LP. Here are some additional facts:
- Year 1: ABC had ordinary business income of $3.4 million for the year; it had no other categories of income or deductible expense; during Year 1 you received a cash distribution from ABC of $400,000.
- Year 2: ABC had ordinary business income of $4.6 million for the year; it had no other categories of income or deductible expense; during Year 2 you received a cash distribution from ABC of $500,000.
- Year 3: ABC had ordinary business income of $1.8 million for the year; it had no other categories of income or deductible expense; during Year 3 you received a cash distribution from ABC of $450,000.
- Year 4: ABC had an ordinary business loss of $2.75 million for the year; it had no other categories of income or deductible expense; during Year 4 you received no cash distributions from ABC but did make a $125,000 additional capital contribution.
What is your adjusted basis in your ABC partnership interest as of the beginning of Year 5? (Showing calculations optional.)
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