The BCD Partnership plans to distribute cash of $20,000 to partner Barb at the end of the tax year. The partnership reported a loss for the year, and Barb's share of the loss is $10,000. Barb holds a basis of $15,000 in the partnership interest, including her share of partnership liabilities. The partnership expects to report substantial income in future years. If an amount is zero, "0". a. Generally, in what order are the allocated items applied for calculating Barb's ending basis in the BCD Partnership interest? • Losses may be deducted under § 704(d). • Distributions from the partnership decrease basis. • Contributions and income items increase the basis. • Allocation of deductions. b. As a result of the $20,000 distribution, Barb's basis is $fill in the blank d98d8cf89ff4fe3_1 and reports a $fill in the blank d98d8cf89ff4fe3_2 for the tax year due to the distribution. c. How will the deduction for any of the $10,000 loss be treated by Barb? d. Select either "Yes" as something that could be done to minimize the tax ramifications of the distribution or "No", this can not be done. • The partnership can make the distribution at the beginning of the following tax year. • The partnership could incur additional (short-term) debt at the end of the year. • Barb can allocate his loss to another partner.
Problem 14-23 (LO. 5, 6)
The BCD
If an amount is zero, "0".
a. Generally, in what order are the allocated items applied for calculating Barb's ending basis in the BCD Partnership interest?
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b. As a result of the $20,000 distribution, Barb's basis is $fill in the blank d98d8cf89ff4fe3_1 and reports a $fill in the blank d98d8cf89ff4fe3_2 for the tax year due to the distribution.
c. How will the deduction for any of the $10,000 loss be treated by Barb?
d. Select either "Yes" as something that could be done to minimize the tax ramifications of the distribution or "No", this can not be done.
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