Question

Question 15 of 75. Dione is a general partner who owns 50% interest in Love First Enterprises. Sammy is a limited partner who also owns 50%. The partnership has $50,000 in recourse liabilities and $20,000 in nonrecourse liabilities. What is Dione's total share of liabilities? O $35,000 O $45,000 O $60,000 O $70,000

Answer 1

Answer 1) The correct answer is $60,000

Recourse liabilities are usually allocable only to general partners, since limited partners cannot typically be required to contribute additional funds to the partnership. The nonrecourse liabilities are shared in accordance with the partner's share of partnership profits. Thus the general partner's share of nonrecourse debt is $ 10,000.

Thus Dione's total share of liabilities = $ 50,000 + $ 10,000

Thus Dione's total share of liabilities = $ 60,000

Answer 2) option a is correct.

Jaylan's basis in the partnership is $12000 and Casper's is $10000.

Jaylan cannot take large portion of profits as they are equal partners. As per IRS rule, the original basis is considered in partnership.