Dan Purchases a 25% Interest in the Haymarket Partnership for $20,000

question 50

Essay

Dan purchases a 25% interest in the Haymarket Partnership for $20,000 on January 1,2010,and begins to materially participate in the partnership's business.The Haymarket Partnership uses the calendar year as its tax year.At the time of the purchase,the Haymarket Partnership has $2,000 in liabilities,and Dan's share is 25%.During the year,the Haymarket Partnership incurs $8,000 in losses and its liabilities increase by $4,000.What is Dan's basis in his partnership interest on December 31,2010?

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Definitions:

Market-based Opportunity

Opportunities identified through market analysis, indicating areas where a business can gain competitive advantage or meet unfulfilled customer needs.

Measurable Accomplishment

Achievements or milestones that can be quantitatively assessed or verified, often used as indicators of success or progress.

Need for Achievement

A personal drive in individuals leading them to pursue and attain challenging goals, often associated with a high level of ambition and effort to succeed.

Self-reliance

The ability to rely on one's own capabilities, resources, and judgments.