Kent contributed $50,000 in exchange for a 40% interest in a partnership at the beginning of the year. The partnership has no liabilities in place at the time of Kent's contribution. At the end of the year, the partnership correctly allocates $30,000 ordinary loss and a $50,000 long term capital loss to Kent. In addition, during the year, the partnership borrowed $100,000. $40,000 of this liability is allocable to Kent. At the end of the year, Kent's outside basis equals ____ and his capital account equals _______.
Kent contributed $50,000 in exchange for a 40% interest in a partnership at the beginning of the year. The partnership has no liabilities in place at the time of Kent's contribution. At the end of the year, the partnership correctly allocates $30,000 ordinary loss and a $50,000 long term capital loss to Kent. In addition, during the year, the partnership borrowed $100,000. $40,000 of this liability is allocable to Kent. At the end of the year, Kent's outside basis equals ____ and his capital account equals _______.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Kent contributed $50,000 in exchange for a 40% interest in a partnership at the beginning of the year. The partnership has no liabilities in place at the time of Kent's contribution. At the end of the year, the partnership correctly allocates $30,000 ordinary loss and a $50,000 long term capital loss to Kent. In addition, during the year, the partnership borrowed $100,000. $40,000 of this liability is allocable to Kent. At the end of the year, Kent's outside basis equals ____ and his capital account equals _______.
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