Homework SourseKLMN Partnerships financial records show the following Mr T
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 | ) | |
Solution
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
