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 A’s share of liabilities is $14,500 (and his basis is $24,500) and Partner B’s 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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This note was uploaded on 09/09/2011 for the course TAX 5015 taught by Professor Kelliher,c during the Spring '08 term at University of Central Florida.
- Spring '08