BPA Partnership Is an Equal Partnership in Which Each of the Partners

question 22

Essay

BPA Partnership is an equal partnership in which each of the partners has a basis in her partnership interest of $20,000. BPA reports the following balance sheet: $\begin{array}{l}\begin{array}{c}\\Inventory\\Land\\Total\\\end{array}\begin{array}{c}\text { Basis } \\\$ \mathbf{4 0 , 0 0 0} \\\underline{\mathbf{2 0 , 0 0 0}} \\\$ \mathbf{6 0 , 0 0 0} \\\hline\end{array}\begin{array}{c}{\text { FMV }}\\{\$ 60,000} \\\underline{\mathbf{3 0 , 0 0 0}} \\\hline \mathbf{9 0 , 0 0 0} \\\end{array}\end{array}$

Brooke, capital $\quad\quad\$20,000$
Penelope, capital $\quad\quad20,000$
Amanda, capital $\quad\quad\underline{20,000}$
Total $\quad\quad\quad\quad\quad\quad\$60,000$ a. Identify the hot assets if Brooke decides to sell her interest in BPA.
b. Are these assets "hot" for purposes of distributions?

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Definitions:

Industry Structure

The characteristics that influence the nature of competition and pricing in a particular industry, including the number and size of firms, entry barriers, and product differentiation.

Government Restrictions

Regulations imposed by authorities to control or limit certain activities, behaviors, or operations.

Exclusive Right

A legal provision giving the holder the sole permission to produce, use, or sell a particular commodity or concept.

Cement

A binding agent used in construction that sets, hardens, and adheres to other materials, commonly used to bind sand and gravel in concrete.