Doug Purchases a 20% Interest in the Quix Partnership for $10,000

question 16

Essay

Doug purchases a 20% interest in the Quix Partnership for $10,000 on January 1, 2019, and begins to materially participate in the partnership's business. The Quix Partnership uses the calendar year as its tax year. At the time of the purchase, the Quix Partnership has $4,000 in liabilities, and Doug's share is 20%. What is Doug's basis in his partnership interest on January 1, 2010?

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Definitions:

Earned Income Tax Credit

A refundable tax credit for low- to moderate-income working individuals and families, especially those with children.

Minimum Wage Laws

Regulations that dictate the lowest legal hourly compensation employers must pay their workers.

Minimum Wage

The lowest wage rate that employers can legally pay their workers, established by government regulation.

Employment Level

A measure indicating the number of people currently employed in an economy, typically not including those self-employed.