On January 1, 2026 James pays $45,000 for a 20% capital, pro…
On January 1, 2026 James pays $45,000 for a 20% capital, profits and loss interest in Monroe Partnership, which has liabilities of $420,000. The partners share economic risk of loss from liabilities in the same way they share partnership losses. In 2026, Monroe incurs losses of $365,000 and the liabilities increase by $115,000. James’s basis at year-end is