The LMN Partnership has the following assets and liabilities before any reductio

Question

The LMN 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. Description Basis Value Assets $300,000 $400,000 Nonrecourse debt $500,000 $500,000 If the partners have a deficit in their capital accounts of ($100,000), what is the amount of minimum gain chargeback if partnership taxable loss for the year is ($20,000) and the liabilities are reduced by $250,000? A. $0 B. $20,000 C. $50,000 D. $100,000

Explanation / Answer

amount of minimum gain chargeback  = Basis Value Assets book basis - liabilities as reduced

= $ 300,000 - $ 250,000

= $ 50,000 (Option C is the Answer)

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