Esther and Elizabeth are equal partners in the EE Partnership. The partners formed the partnership seven years ago by contributi
ng cash. Prior to any distributions, the partners each have a $40,800 basis in their partnership interests including their share of partnership liabilities. On December 31, EE partnership repays $66,000 of debt. What is the amount and character of Esther's recognized gain or loss
Answer: Esther does not recognize any gain or loss on the distribution and her remaining basis in EE is $15,000
Explanation:
Base on the scenario been described in the question, repayment of liabilities is treated as a cash distribution. Esther's share of the debt reduction is Since this amount is lower than her outside basis ($40,000) she does not recognize a gain or loss.reduces her outside basis by the $25,000, which leaves her $15,000 of outside basis in EE afterthe debt repayment.
A compilation is part of the write-up service of accounting firms that involves conversion of data into financial statements without providing assurances or auditing services.
A compilation report usually accompanied the financial statements to show that data is well represented, and also to show that there has been no audit so the accountant is not giving an opinion.
So the CPA will not be violating independent rules by working on compilations.
You want your hand to "give" a bit when you catch the ball. You don't want want the ball to come to a hard stop because that would risk hurting your hand.
