In the Current Year, the CAR Partnership Received Revenues of $400,000

question 8

Essay

In the current year, the CAR Partnership received revenues of $400,000 and paid the following amounts: $160,000 in rent, utilities, and salaries; a $40,000 guaranteed payment to partner Ryan; $20,000 to partner Amy for consulting services; and a $40,000 distribution to 25% partner Cameron. In addition, the partnership realized a $12,000 net long- term capital gain. Cameron's basis in his partnership interest was $60,000 at the beginning of the year and included his $25,000 share of partnership liabilities. At the end of the year, his share of partnership liabilities was $15,000.
a. How much income must Cameron report for the tax year?
b. What is Cameron's basis in the partnership interest at the end of the year?

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Definitions:

Body Temperatures

The measure of the body's ability to generate and get rid of heat, reflecting the balance between heat production and loss.

Intense Thirst

A strong desire to drink fluids, often a symptom of dehydration or certain health conditions.

Sphenoidal

Sphenoidal refers to pertaining to or resembling the sphenoid bone, a butterfly-shaped bone at the base of the skull.

Cerebrum

The largest part of the brain, consisting of the right and left hemispheres, responsible for integrating sensory input, coordinating movement, and higher cognitive functions such as reasoning and emotion.