Partners A B C & D form a medical equipment leasing biz. on 1/1/08 each partner contributed $20k. The partnership borrowed $120k and along with the $80k of cash contributions, purchased x ray equipment for $200k.
The pshp generates net rental cashflow, i.e. income b4 depreciation, of $80k per yr. Depreciation expenses is $30k per yr for the 1st 3yrs. partners agree to split all net rental income b4 depreciation equally, all other depreciation deductions will be allocatd to partner A.
During each of the 1st 3yrs the pshpuses $30k of the annual cashflow to pay down the equipment loan; the remainig cash is held in a non-interest bearing checking acct.
Only partner C&D have an unlimited deficit restoration obligation. The pshp agreement otherwise provides for a qualified income offset and for the maintenance of capital accounts and liquidation in accordance with those capital accounts.
Calculate each partner's book capital account as of the end of 2008, 2009, &2011.Determine each partner's tax basis in the pshp as of 12/31/2010 assuming the equipment loan is a recourse obligation.