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Clark and Lewis are partners who share the profits and losses of the C&L Partnership 60% and 40%, respectively. The tax basis of each partner's interest in the partnership as of December 31 of last year was as follows: Clark, $14,000; Lewis, $12,000. During the current year, the partnership had ordinary income of $20,000 and a long-term capital loss of $10,000 from the sale of securities. The partnership made cash distributions proportionately to the two partners during this year totaling $20,000. What is the amount of Lewis's tax basis of his partnership interest on December 31 of the current year?
Financial Statements
Formal reports detailing the financial activities and condition of a business, including the balance sheet, income statement, and cash flow statement.
Net Income
The total earnings of a company after subtracting all expenses, including taxes and operating costs.
LIFO Inventory Valuation
Last-in, first-out method, an inventory costing method where the last items purchased are the first ones considered sold.
Phantom Profits
Profits that are recorded on the books but do not result in an actual cash benefit, often due to accounting practices or non-cash expenses.
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