(solution) On Jan 1, Larry payed $2,000 for 10% capital profits and loss

(solution) On Jan 1, Larry payed $2,000 for 10% capital profits and loss

On Jan 1, Larry payed $2,000 for 10% capital profits and loss interest in a partnership, that has $20,000 in recourse liabilities. The partners share the economic risk from recourse  liabilities the same way they share partnership losses. In the same year, they incur losses of $6,000 and recourse liabilities increase by $5,000. Larry and the partnership use a calendar tax year-end. What is Larrys basis at year end?

3900

2000

3500

1500