ership LP$,$ a limited partnership, was formed on January $1,$ Year $2.$ Individuals Thomas Green and Judith Smith each Fasta Partnership LP$,$ a limited partnership, was formed on January $1,$ Year $2.$ Individuals Thomas Green and Judith Smith each

contributed cash for an interest in the partnership. Fasta operates a clothing manufacturing business and has a calendar year end.

Green, the general partner, has a $60$ percent ownership interest and actively participates in the management of the business on a

daily basis. Green bears the economic risk of loss relating to all of Fasta's outstanding liabilities, except for Fasta's loan payable to

Smith.

Smith, the limited partner, has a $40$ percent ownership interest and does not actively participate in the operations of the partnership

Smith is not obligated to restore any negative capital accounts upon liquidation of the partnership.

A letter from Green and a copy of Fasta's adjusted tax trial balance for the year ended December $31,$ Year $3,$ can be found in the

exhibits.

For each item requested below, enter the applicable amount in the appropriate cell as a positive, whole value. If a response is zero,

enter a zero $(0)$

cash for an interest in the partnership. Fasta operates a clothing manufacturing business and has a calendar year end.

feneral partner, has a $60$ percent ownership interest and actively participates in the management of the business on a

Green bears the economic risk of loss relating to all of Fasta's outstanding liabilities, except for Fasta's loan payable to

mited partner, has a $40$ percent ownership interest and does not actively participate in the operations of the partnership.

obligated to restore any negative capital accounts upon liquidation of the partnership.

Green and a copy of Fasta's adjusted tax trial balance for the year ended December $31,$ Year $3,$ can be found in the

m requested below, enter the applicable amount in the appropriate cell as a positive, whole value. If a response is zero,

$(0).$

Client Letter

Fasta Partnership LP

$923$ Silver Way

Pedricktown, WY $82600$

January $15,$ Year $4$

Dear CPA:

Enclosed is a copy of our tax basis trial balance as of December $31,$ Year $3.$ All booktax differences

have been properly reflected.

The following information relates to transactions that occurred during Year $3$

On December $31,$ Year $3,$ Judith Smith loaned Fasta $$15,000.$ Interest on the loan is calculated at

a market rate.

On July $1,$ Year $3,$ Fagqa borrowed $$50,000$ from Midland Banktc purchase equipment. The loan

has a $10-$year term, and interest is calculated at a market rate Payments are due monthly and

began on September $1,$ Year $3.$ Based on the loan documents, this is a recourse liability.

Depreciation expense has been calculated using MACRS. In addition, Fasta decided not to elect a

Section $179$ deduction for Year $3.$

Interest income of $$1,000$ was received on Fasta's saving account throughout the year.

Please contact me if you have any questions regarding the trial balance.

Sincerely,

Thomas Green

Thomas Green

Fasta Partnership LP

General Partner

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