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:

Funding

The act of providing financial resources to support a project, business, or idea.

Key Partners

Strategic relationships with other businesses or entities that are essential to the success and operations of a company or organization.

Key Activities

The essential tasks or operations that must be carried out to deliver a company's value proposition to its customers.

Key Resources

The essential inputs and assets necessary for a business or organization to operate effectively and achieve its goals.