The XYZ Partnership has the following assets and liabilities before any reductio
ID: 2604360 • Letter: T
Question
The XYZ Partnership has the following assets and liabilities before any reduction for year-end principal payments on the liabilities. Assume the book basis and tax basis are the same amount: They have assets with $300,000 basis and FMV of $400,000. Nonrecourse debt of $500,000 basis and FMV of $500,000. If the partners have a deficit in their capital accounts of ($22,000), what is the amount of minimum gain chargeback if partnership taxable income for the year is $32,000 and the liabilities are reduced by $150,000 to $350,000? A. $20,000 B$22,000 C. $32,000 or D. $50,000
Explanation / Answer
Solution: $22,000
Working:
Liabilities
350,000
Taxable income
32,000
Capital deficit
22,000
minimum gain chargeback = 22,000
Liabilities
350,000
Taxable income
32,000
Capital deficit
22,000
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