Scenario 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 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. Year 1 Year 2 Service revenue $60,000 $88,000 Rental revenue 81,000 130,000 Parts sales revenue 9,000 15,000 Total revenue $150,000 $233,000 Guaranteed payment (John) $78,000 $84,000 Rent expense 55,000 56,000 Parts used 10,000 16,000 Utilities expense 5,000 5,000 Interest expense 6,000 6,000 Late filing penalty 700 0 Charitable contributions 0 1,000 Depreciation (MACRS tax method) 10,000 16,000 Advertising expense 5,300 4,000 Total expenses $170,000 $191,000 Net income (loss) $(20,000) $ 45,000 John Scoots Owner Contributions and Distributions John 60% Kate 40% 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 Year Ending December Year Ending December 31, Year 1 31, Year 2 Cash $38,000 $48,000 Parts inventory 7,000 9,000 Prepaid rent 5,000 5,000 Rental scooters 50,000 70,000 Accumulated depreciation (8,000) (22,000) Shop equipment 15,000 15,000 Accumulated depreciation (3,000) (5,500) Land for future expansion 45,000 45,000 Total assets $149,000 $164,500 Trade accounts payable $7,000 $12,000 Bank loan payable (secured by land) 42,000 27,500 Total liabilities $49,000 $49,500 John, capital account (60%) $60,000 $69,000 40,000 46,000 Kate, capital account (40%) Total capital $100,000 $115,000 Total liabilities and capital $149,000 $164,500 John Kate $0 $0 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