Shannon and Art Are Each 10% Partners in the Such-A-Deal

question 16

Essay

Shannon and Art are each 10% partners in the Such-A-Deal Partnership. Due to several years of partnership operating losses, both Shannon and Art have a zero basis in their partnership interests. For the current year, the partnership is incurring a loss of $100,000. When he hears the news about the loss, Shannon tells Art he wishes the partnership management would go to the local bank and borrow "a couple of hundred thousand dollars." Art does not understand why Shannon would want the partnership to go into debt. The concept of debt makes Art very nervous; Art personally does not borrow money. In fact, Art does not even use credit cards. Explain to Art why Shannon wants the partnership to incur more debt. Also, comment on why Art's general concerns about debt have merit, specifically focusing on the partnership debt.

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Definitions:

Positive Psychology

An area of psychology focused on the study and enhancement of positive human functioning, well-being, and flourishing on multiple levels.

Resilience

A person’s ability to recover and often prosper following some consequential life event.

Spirituality

A broad concept that involves seeking a sense of peace, purpose, connection, and meaning, often related to the belief in something greater than oneself.

Positive Individual Traits

Dispositional qualities that account for why some people are happier and psychologically healthier than others.