The ABC Partnership has the following assets and liabilities

The ABC 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 non recourse debt $500,000 $500,000 If the partners have a deficit in their capital account of ($100,000), whitch is the amount of Minimum gain chargeback if the 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

Solution

A partnership’s minimum gain is generally equal to the excess of a partnership’s non-recourse liabilities over the adjusted tax basis of the property securing the debt. Since the liability have decreased to $ 150,000. The minimum gain chargeback would be adjusted basis ( $ 300,000) - nonrecourse liabilities ( $ 350,000) = $ 50,000. Option C