Select the best answer x, Y, and Z are equal partners in the XYZ Partnership and

Question

Select the best answer x, Y, and Z are equal partners in the XYZ Partnership and share profits and losses accordingly. At the end of 20X1, the partnership's capital accounts reflect the following numbers due to a special allocation of depreciation Capital X Capital Z Capital Y $40,000 ($10,000) ($20,000) If all the assets are sold for $10,000, which of the following statements is true? A. X shares n Y and Z's contribution B. × takes y, and Zsentire contribut io OC. Y contributes nothing Submit Answers Exit & Resume Later

Explanation / Answer

1) Option (D) Y shares in Z's Capital contribution

2) Option (A) 6000 because the liabilities are not changed in 2nd year so there is no change in basis for that as well as the loss effect will be 4000 (40000*10%) so it will reduce the liability to 6000.

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