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:

Wrongfully Terminated

Being dismissed or fired from a job for illegal or improper reasons that violate company policy or law.

Franchisor

A franchisor is a business that grants licenses to franchisees for the operation of a business under the franchisor's brand and system.

Franchise

A type of business relationship where a franchisor allows a franchisee to use its trademark, products, and business model in exchange for a fee.

Sole Proprietorship

A business structure where a single individual both owns and operates the business, and is responsible for all its debts and liabilities.