In January, Daryl and Louis Form a Partnership with Each

question 56

Essay

In January, Daryl and Louis form a partnership with each contributing $75,000 in cash. The partnership agreement provides that Daryl would receive a guaranteed payment for salary of $20,000 and that partnership profits and losses (computed after deducting Daryl's salary)would be shared equally. For the year, the partnership's operations result in an $18,000 ordinary loss after payment of Daryl's guaranteed payment. The partnership has no outstanding liabilities at year-end. What is the basis amount of Daryl's partnership interest at year-end?

---

Definitions:

Unpaid

Work or services performed without receiving financial compensation.

Respondeat Superior

A legal doctrine that holds an employer or principal legally responsible for the wrongful acts of an employee or agent, if such acts occur within the scope of the employment or agency.

Legal Doctrine

A framework, set of rules, procedural steps, or test, often established by precedent in the common law, for making a determination in a lawsuit.

Employers Liable

Pertains to the legal responsibility of employers for the actions of their employees and for providing a safe working environment.