Patrick Purchases a One-Third Interest in the PPP Partnership for $600,000

question 82

Multiple Choice

Patrick purchases a one-third interest in the PPP partnership for $600,000. The partnership has assets with a value of $1,500,000. PPP has a 754 election in effect. What is the amount of the basis adjustment?

• A)$0
• B)$300,000 increase in the basis of partnership assets
• C)$100,000 increase in Patrick's basis in the partnership assets
• D)$100,000 increase in Patrick's share of the basis in the partnership assets

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Definitions:

Outstanding Checks

Checks that have been written and recorded in the accounting books but have not yet been cashed or cleared by the bank.

Month-end Bank Statement

A document provided by a bank summarizing the account’s activity and balances over the last month, used for reconciling the bank account.

Erroneously Charged

Refers to a financial transaction or fee that has been incorrectly applied to an account.

Outstanding Checks

Checks issued by a company that have not yet been cashed or cleared by the bank, considered in reconciling the bank statement.