Gerald Has a 30% Ownership Interest in a Business for Which

question 112

Essay

Gerald has a 30% ownership interest in a business for which his basis is $300,000.During the year,the entity earns profits of $90,000 and makes cash distributions to the owners of $50,000.How do these transactions affect Gerald's basis if:

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Definitions:

Accept

To receive something willingly or to agree to a proposition or offer.

Promisee

The person to whom a promise is made or directed in a contract, opposite to the promisor.

Promisor

The individual or party in a contract who makes a promise to perform an act or service.

Promisee

The party in a contract to whom a promise is made by another party (the promisor), and who stands to benefit from the fulfillment of that promise.