Peter, Matt, Priscilla, and Mary Began the Year in the PMPM

question 34

Essay

Peter, Matt, Priscilla, and Mary began the year in the PMPM General Partnership sharing profits, losses, and capital equally. They each had a tax basis at the beginning of the year of $3,000, $10,000, $8,000, and $11,000 respectively. Early in the year, Mary provided general consulting services to the partnership and received an additional 15 percent profits, losses, and capital interest in the partnership. The liquidation value of her additional interest was $45,000. Later the same year, the partnership received cash contributions of $25,000 from Peter and Matt that it used to repay the partnership's $35,000 recourse debt. According to state law, the partners shared responsibility for this debt in accordance with their loss sharing ratios. What is each partner's tax basis after adjustment for these transactions?

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Definitions:

Person-machine System

A framework or environment where humans and machines interact for the purpose of enhancing overall system performance.

Cognitive Capabilities

Cognitive Capabilities refer to the range of mental skills that are involved in acquiring knowledge, processing information, and critical thinking.

Technology

The application of scientific knowledge for practical purposes, especially in industry and the development of innovative tools and machinery.

Paradigm

A body of knowledge that selects and highlights certain issues for study. It includes assumptions about how a particular phenomenon ought to be studied and the kinds of experimental methods and measures that are appropriate to use.