The ABC Partnership has the following asset and liabilities before any reduction
ID: 2399862 • Letter: T
Question
The ABC Partnership has the following asset and liabilities before any reduction for year-end principal payments on the liabiities. Assume the book basis and tax basis are the same.
Assets Basis = $300,000 Value = $400,000 Nonrecourse debt Basis = $500,00 Value = $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 income for the year is $20,000 and the liabilities are reduced by $150,000 to $350,000?
A. $0
B $20,000
C $50,000
D $150,000
Explanation / Answer
Solution: (B ) - $20000
Working:
Liabilities
350,000
Taxable income
20,000
Capital deficit
100,000
minimum gain chargeback will be 20000
Liabilities
350,000
Taxable income
20,000
Capital deficit
100,000
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