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30 October, 10:32

Hilary had an outside basis in LTL General Partnership of $10,000 at the beginning of the year. LTL reported the following items on Hilary's K-1 for the year: ordinary business income of $5,000, a $10,000 reduction in Hilary's share of partnership debt, a cash distribution of $20,000, and tax-exempt income of $3,000. What is Hilary's adjusted basis at the end of the year

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  1. 30 October, 13:55
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    Hilary's adjusted basis at the end of the year $0

    Explanation:

    Hillary's base in general business income and tax-free income grows and then deducts. He understood the cash flow from his original cash disbursement and partnership debt reduction. Hillary must report a capital gain of $ 12,000 on a zero interest basis in her partnership interest, since his actual and perceived cash distribution exceeds his base after raising it through a positive adjustment for the year.

    $10,000 + $5,000 - $3,000 - $10,000 - $2,000 = 0
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