KLMN Partnership’s financial records show the following: Mr. T is a 10 percent g
ID: 2413598 • Letter: K
Question
KLMN Partnership’s financial records show the following:
Mr. T is a 10 percent general partner in KLMN. During the year, he received a $1,000 cash distribution from KLMN.
How would your basis computation change if KLMN’s debt at the end of the year was $28,000 more than its debt at the beginning of the year?
Gross receipts from sales $ 670,000 Cost of goods sold (460,000 ) Operating expenses (96,800 ) Business meals and entertainment (6,240 ) Section 1231 loss on equipment sale (13,500 ) Charitable contribution (1,500 ) Distributions to partners (10,000 )Explanation / Answer
THE BASIS computation will not changebecause debt does not effect KLMN s shareholders basis .a debt of $28000 at the begining will not affect the basis
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