Benson Contributed $60,000 of Cash in Exchange for a 50

question 6

Multiple Choice

Benson contributed $60,000 of cash in exchange for a 50% interest in the Palm partnership capital and profits.During the first year of partnership operations, Palm had net taxable income of $80,000.In addition Benson received a $20,000 distribution of cash from the partnership and he has a 50% share in the $26,000 of partnership recourse liabilities on the last day of the partnership year.Benson's adjusted basis (outside basis) for his partnership interest at year-end is:

• A)$166,000.
• B)$100,000.
• C)$93,000.
• D)$73,000.
• E)None of the above.

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Definitions:

Pro Forma Financial Statements

Financial statements that project the future financial performance of a company, often used for planning or investment analysis.

CCA Tax Shield

A reduction in taxable income in Canada, achieved by deducting the Capital Cost Allowance on assets.

Operating Cash Flow (OCF)

Cash generated from a firm's normal business operations.