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10 March, 16:46

Daniel acquires a 30% interest in the PPZ Partnership from Paolo, an existing partner for $43,000 of cash. The PPZ Partnership has borrowed $14,000 of recourse liabilities as of the date Daniel bought the interest. What is Daniel's basis in his partnership interest?

a. $47,200

b. $14,000

c. $57,000

d. $52.800

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  1. 10 March, 17:03
    0
    The right answer is a.

    Explanation:

    In order to calculate Daniel's basis in his partnership interest, first we have to calculate daniel share of the partnership liabilities.

    According to the details, Daniel acquires a 30% interest in the PPZ Partnership from Paolo, and The PPZ Partnership has borrowed $14,000 of recourse liabilities as of the date Daniel bought the interest, hence

    daniel share of the partnership liabilities = 14,000 * 30% = $4,200

    Hence, Daniel's basis in his partnership interest = 43,000 + 4,200 = $47,200
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