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Unformatted text preview: Step Five: Partnership repays recourse payable. Step Six: Partnership liquidates (any remaining cash is distributed to partners with positive capital balances zero in this case). Thus, Partner As share of liabilities is $14,500 (and his basis is $24,500) and Partner Bs share of liabilities is $10,500 (and his basis is $24,500). Note: This is a hypothetical worst-case scenario. The partnership does NOT actually sell their assets for $0; the partners do NOT actually contribute money to the partnership; and the partnership is NOT liquidated. This is merely an exercise to allocate partnership recourse debt to the individual partners....
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- Spring '08