Question

KLMN Partnership’s financial records show the following: Gross receipts from sales $ 670,000 Cost of goods...

KLMN Partnership’s financial records show the following:

Gross receipts from sales $ 670,000
Cost of goods sold (460,000 )
Operating expenses (96,800 )
Business meals and entertainment (6,240 )
Section 1231 loss on equipment sale (13,500 )
Charitable contribution (1,500 )
Distributions to partners (10,000 )

Mr. T is a 10 percent general partner in KLMN. During the year, he received a $1,000 cash distribution from KLMN.

How would your basis computation change if KLMN’s debt at the end of the year was $28,000 more than its debt at the beginning of the year?

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Answer #1

THE BASIS computation will not changebecause debt does not effect KLMN s shareholders basis .a debt of $28000 at the begining will not affect the basis

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