Capital Account Rollforward for Computation of Partner\'s Outside Basis at Begin

Question

Capital Account Rollforward for Computation of Partner's Outside Basis at Beginning and End of Year when Several Transactions Took Place (LO. 4, 5)

Amy and Mitchell are equal partners in the accrual basis AM Partnership. At the beginning of the current tax year, Amy's capital account has a balance of $300,000, and the partnership has recourse debts of $200,000 payable to unrelated parties. Assume that all partnership recourse debt is shared equally between the partners. The following information about AM's operations for the current year is obtained from the partnership's records:

Assume that year-end partnership debt payable to unrelated parties is $140,000 and that all transactions are reflected in her beginning capital and basis in the same manner.

Prepare Amy's capital account rollforward from the beginning to the end of the tax year in order to determine Amy’s capital account at the beginning of the year, Amy’s capital account at the end of the year, and how the capital account balances differ from her basis amount.

Amy's capital account differs from her basis only by the amount of her share of partnership SelectassetsliabilitiesItem 12 .

Ordinary income $400,000 Interest income 4,000 Long-term capital loss 6,000 Short-term capital gain 12,000 Charitable contribution 4,000 Cash distribution to Amy 20,000

Explanation / Answer

Capital Account balance, Beginning year 300000 Taxable Income 200000 Interest Income 2000 Short term capital gain 6000 Total 208000 Less: Long term Capital loss -3000 Charitable contribution -2000 Cash distribution to Amy -10000 Total -15000 Capital Account Balance, end of year 493000

Related Questions

Navigate

• Browse (All)
• Browse C
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.