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John Scoots LP, a calendar-year partnership, provides scooter repair services and rents scooters. The business started on January 1, Year 1. John owns 60% of the partnership, and Kate owns 40%. John, a general partner, manages the shop and receives a guaranteed payment from the partnership. Kate is a limited partner and is not involved in the operations of the bus.

Using the following information, complete the Excel spreadsheet to calculate the amount of each partner's basis in the partnership interest at the end of Year 1 and Year 2

John Scoots Income Statement Service revenue Rental revenue Parts sales revenue Total revenue Year 1 $60,000 81,000 9,000 $150,000 Year 2 $88,000 130,000 15,000 $233,000 Guaranteed payment (John) Rent expense Parts used Utilities expense Interest expense Late filing penalty Charitable contributions Depreciation (MACRS tax method) Advertising expense Total expenses $78,000 55,000 10,000 5,000 6,000 700 $84,000 56,000 16,000 5,000 6,000 0 1,000 16,000 4,000 $191,000 0 10,000 5,300 $170,000 Net income (loss) $(20,000) $ 45,000 John 60% Kate 40% John Scoots Owner Contributions and Distributions Year 1 Contributions Cash $ 10,000 $ 48,000 Refurbished Scooters Cost Basis Fair Market Value $ 48,000 $ 53,000 Shop Equipment Cost Basis Fair Market Value $ 14,000 $ 10,000 Year 2 Cash Contributions $ 18,000 $ 12,000 John Scoots Balance Sheet Cash Parts inventory Prepaid rent Rental scooters Accumulated depreciation Shop equipment Accumulated depreciation Land for future expansion Total assets Year Ending December 31, Year 1 $38,000 7,000 5,000 50,000 (8,000) 15,000 (3,000) 45,000 $149,000 Year Ending December 31, Year 2 $48,000 9,000 5,000 70,000 (22,000) 15,000 (5,500) 45,000 $164,500 Trade accounts payable Bank loan payable (secured by land) Total liabilities $7,000 42,000 $49,000 $12,000 27,500 $49,500 John, capital account (60%) Kate, capital account (40%) Total capital $60,000 40,000 $100,000 $69,000 46,000 $115,000 Total liabilities and capital $149,000 $164,500 Enter losses, deductions, and distributions as negative values. Enter income, gains, and contributions as positive values. If an item is zero, or the item does not impact basis in the partner's John Kate Year 1: Beginning basis in partnership interest Contributions Partnership recourse debt (trade accounts payable) Partnership nonrecourse secured debt (land) Ordinary business income Nontaxable income Separately stated income items Guaranteed payment (John) Distributions Nondeductible expenses Ordinary business loss Separately stated expense items Year 1 Ending Basis in Partnership Interest Year 2: Contributions Increase in partnership recourse debt (accounts payable) Increase in partnership nonrecourse secured debt (land) Ordinary business income Nontaxable income Separately stated income items Guaranteed payment (John) Decrease in partnership recourse debt (accounts payable) Decrease in partnership nonrecourse secured debt (land) Distributions Nondeductible expenses Ordinary business loss Separately stated expense items Year 2 Ending Basis in Partnership John Scoots Income Statement Service revenue Rental revenue Parts sales revenue Total revenue Year 1 $60,000 81,000 9,000 $150,000 Year 2 $88,000 130,000 15,000 $233,000 Guaranteed payment (John) Rent expense Parts used Utilities expense Interest expense Late filing penalty Charitable contributions Depreciation (MACRS tax method) Advertising expense Total expenses $78,000 55,000 10,000 5,000 6,000 700 $84,000 56,000 16,000 5,000 6,000 0 1,000 16,000 4,000 $191,000 0 10,000 5,300 $170,000 Net income (loss) $(20,000) $ 45,000 John 60% Kate 40% John Scoots Owner Contributions and Distributions Year 1 Contributions Cash $ 10,000 $ 48,000 Refurbished Scooters Cost Basis Fair Market Value $ 48,000 $ 53,000 Shop Equipment Cost Basis Fair Market Value $ 14,000 $ 10,000 Year 2 Cash Contributions $ 18,000 $ 12,000 John Scoots Balance Sheet Cash Parts inventory Prepaid rent Rental scooters Accumulated depreciation Shop equipment Accumulated depreciation Land for future expansion Total assets Year Ending December 31, Year 1 $38,000 7,000 5,000 50,000 (8,000) 15,000 (3,000) 45,000 $149,000 Year Ending December 31, Year 2 $48,000 9,000 5,000 70,000 (22,000) 15,000 (5,500) 45,000 $164,500 Trade accounts payable Bank loan payable (secured by land) Total liabilities $7,000 42,000 $49,000 $12,000 27,500 $49,500 John, capital account (60%) Kate, capital account (40%) Total capital $60,000 40,000 $100,000 $69,000 46,000 $115,000 Total liabilities and capital $149,000 $164,500 Enter losses, deductions, and distributions as negative values. Enter income, gains, and contributions as positive values. If an item is zero, or the item does not impact basis in the partner's John Kate Year 1: Beginning basis in partnership interest Contributions Partnership recourse debt (trade accounts payable) Partnership nonrecourse secured debt (land) Ordinary business income Nontaxable income Separately stated income items Guaranteed payment (John) Distributions Nondeductible expenses Ordinary business loss Separately stated expense items Year 1 Ending Basis in Partnership Interest Year 2: Contributions Increase in partnership recourse debt (accounts payable) Increase in partnership nonrecourse secured debt (land) Ordinary business income Nontaxable income Separately stated income items Guaranteed payment (John) Decrease in partnership recourse debt (accounts payable) Decrease in partnership nonrecourse secured debt (land) Distributions Nondeductible expenses Ordinary business loss Separately stated expense items Year 2 Ending Basis in Partnership

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