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:

Abraham Maslow

An American psychologist known for creating Maslow's hierarchy of needs, a theory of psychological health predicated on fulfilling innate human needs in priority.

Self-actualization

The realization or fulfillment of one's talents and potentialities, considered as a drive or need present in everyone.

Self-efficacy

The belief in one's ability to succeed in specific situations or accomplish a task, which can play a significant role in how one approaches goals, tasks, and challenges.

Reciprocal Determinism

A concept in social psychology that suggests individual behavior, environment, and cognitive factors influence each other in a bidirectional fashion.