Question

Facts: BC Business Entity, owned equally by Bernie and Carl, reported the following items during 2018: Sales revenue 400,000 11,000 7,000 20,000 (150,000) (84,000) 8,000 (9,000) (2,000) (25,000) (40,000) Interest earned on corporate bonds Interest earned on State of Tennessee bonds Dividends from 10% owned domestic corporation Cost of goods sold Operating expenses Long-term capital gain Short-term capital loss Interest on loan used to purchase State of Tennessee Bonds Salary/guarantecd payment, paid to Bernie* Distribution of profits to owner(s)** *Salary in the case of a C and S corporation, and guaranteed payment in the case of a partnership. ** The distribution was paid equally to BC's owner(s) (the $40,000 was distributed $20,000 each to Bernie and Carl). The distribution is a legal dividend in the case of a corporation. BC's liabilities (all recourse) on January 1, 2018 were $80,000. BC's liabilities (all recourse) on December 31, 2018 were $90,000.

this is everything that was given.

Answer 1

1. time was not enough to answer all of the requirements, anyways here you have answers to questions 2 and 3. just missing question 1. hope you find this helpful

2. To get Bernie´s basis in his partnership at the end of the year (12/31/19), we must take into account the facts that affect it, such as distributions and liabilities, which decrease the basis.

Bernie´s basis on partnership
Partnership Jan 1,2018		120,000.00
Distributions	(20,000.00)
Liabilities	(5,000.00)
		(25,000.00)
Partnership Dec 31,2018		95,000.00

3. As BC is a general partnership, the self-employment income includes the distribution of profits and the guaranteed payments.

Bernie´s self employment income
distribution of profit	20000
Guaranteed payment	25000
self-employment income		45000