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

Using the information below, 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.

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 partnership interest, enter a zero.

	Jake	Kelly
Year 1:
Beginning basis in partnership interest	$0	$0
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 Interest

Financial Statements and Data

Jake Scoots Income Statement Year 1 Year 2

Service revenue $64,000 $92,000

Rental revenue 80,000 130,000

Parts sales revenue 10,000 16,000

Total revenue $154,000 $238,000

Guaranteed payment (Jake) $76,000 $82,000

Rent expense 52,000 54,000

Parts used 12,000 18,000

Utilities expense 6,000 7,000

Interest expense 6,000 6,000

Late filing penalty 600 0

Charitable contributions 0 2,000

Depreciation (MACRS tax method) 10,000 16,000

Advertising expense 5,500 4,500

Total expenses $168,100 $189,500

Net income (loss) $(14,100) $ 48,500

J Scoots Contributions & Distributions

Jake 60% Kelly 40%

Year 1 Contributions

Cash $ 10,000 $48,000

Refurbished Scooters

Cost Basis $ 48,000

Fair Market Value $ 53,000

Shop Equipment

Cost Basis $ 14,000

Fair Market Value $ 10,000

Year 2 Cash Contributions 18,000 $ 12,000

Jake Scoots Balance Sheet

Year Ending December 31,Year 1 Year Ending December 31, Year 2

Cash $48,000 $58,000

Parts inventory 7,000 9,000

Prepaid rent 5,000 5,000

Rental scooters 50,000 60,000

Accumulated depreciation (8,000) (22,000)

Shop equipment 15,000 15,000

Accumulated depreciation (3,000) (5,500)

Land for future expansion 50,000 50,000

Total assets $164,000 $169,500

Trade accounts payable $12,000 $17,000

Bank loan payable 52,000 37,500

(secured by land)

Total liabilities $64,000 $54,500

Jake, capital account (60%) $60,000 $69,000

Kelly, capital account (30%) 40,000 46,000

Total capital $100,000 $115,000

Total liabilities and capital $164,000 $169,500