Aram owns a 20% interest in a partnership (not real estate) in which her at-risk amount was $35,000 at the beginning of the year.The partnership borrowed $50,000 on a recourse note and made a $40,000 profit during the year.Her at-risk amount at the end of the year is $43,000.

Question

Quizplus · Accepted Answer

Aram's at-risk amount should have decreased by the portion of the partnership's recourse debt for which she is personally liable. In this case, 20% of the $50,000 loan would be $10,000, so her at-risk amount at the end of the year should be $35,000 - $10,000 + $40,000 = $65,000. The given amount of $43,000 is incorrect.

Aram Owns a 20% Interest in a Partnership (Not Real