Peter, Matt, Priscilla, and Mary Began the Year in the PMPM

question 82

Essay

Peter, Matt, Priscilla, and Mary began the year in the PMPM General Partnership sharing profits, losses, and capital equally. They had a tax basis at the beginning of the year of $3,000, $10,000, $8,000, and $11,000, respectively. Early in the year, Mary provided general consulting services to the partnership and received an additional 15 percent profits, losses, and capital interest in the partnership. The liquidation value of her additional interest was $45,000. Later the same year, the partnership received cash contributions of $25,000 from Peter and Matt that it used to repay the partnership's $35,000 recourse debt. According to state law, the partners shared responsibility for this debt in accordance with their loss-sharing ratios. What is each partner's tax basis after adjustment for these transactions?

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Definitions:

Retailers

Businesses or individuals that purchase goods from manufacturers or wholesalers and sell them directly to consumers.

Consumers

End users who purchase goods or services for personal use, driving demand in the economy and influencing market trends and developments.

Indirect Marketing Channel

When one or more intermediaries work with manufacturers to provide goods and services to customers.

Expertise Power

When a channel member uses its expertise as leverage to influence the actions of another channel member.