Miguel Has a 50% Interest in Partnership Capital, Profits, and Losses

question 1

Multiple Choice

Miguel has a 50% interest in partnership capital, profits, and losses. The basis for his partnership interest is $50,000. The partners share the economic risk of loss from recourse liabilities in the same way they share partnership losses. Miguel receives a distribution of land that has an FMV of $40,000 and an adjusted basis of $30,000. The land is subject to a $15,000 liability, which Miguel assumes. His basis in the partnership interest following the land distribution is

• A)$12,500.
• B)$20,000.
• C)$27,500.
• D)$35,000.

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Definitions:

Pro Forma Balance Sheet

A financial statement projecting future financial position of a company based on expected future transactions.

Managers

Individuals who are responsible for directing and overseeing the operations and strategies of an organization or its parts.

Priority Establishment

The process of determining the importance or urgency of various tasks or projects, often used in strategic planning and project management.