Reference no: EM132842390
Ellyn is the general partnera and Danny is the limited partner in ED Limited partnership. The partnership has borrowed on a recourse basis to finance its operations. The partnership agreement provides that the partnership will maintain capital accounts in conformity with IRS? regulations, upon liquidation of the partnership each partner will receive the positive balance in their capital accounts. Ellyn as general partner must make up any deficit in her capital account upon partnership liquidation. Danny as limited partner is not obligated to make up any deficit in his capital account upon partnership liquidation.
The partnership agreement provides that Ellyn is to receive 25? % of all partnership profits and losses and Daany is to receive 75? % of all partnership profits and losses. On December? 31, 2020 Ellyn has a positive capital account of? $100,000 and Danny has a positive capital account of? $300,000.
Problem 1: The partnership has a taxable loss of? $500,000 in 2020. How is that loss allocated between Ellyn and Danny??
A. ?$100,000 to? Ellyn; $400,000 to Danny
B. ?$125,000 to? Ellyn; $375,000 to Danny
C. ?$200,000 to Ellyn? ; $300,000 to Danny
D. ?$250,000 to Ellyn? ; $250,000 to Danny
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