California State University, San Bernardino (CSUSB)
Department of Accounting and Finance
Instructor: John R. Dorocak, J.D., LL.M. (Tax), C.P.A.
- Alice and Bob each receive a 50% interest in a general partnership in exchange for the following capital contributions.
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Cash $25,000 FMV Basis
Land $100,000 $85,000
The land is subject to $75,000 recourse mortgage that is assumed by the partnership at the date of Bob=s contribution.
- How much gain/loss is recognized by each partner and the partnership at the date of the partnership formation?
- What is each partner=s beginning tax basis in his partnership capital account?
- Set up the partnership=s beginning tax basis and FMV balance sheet.
- Determine each partner=s beginning tax basis in his partnership interest.
- What if the liabilities on Bob=s property = 175,000 and FMV = 200,000 – answer A through D
- The Beer & Pretzels Partnership is a limited partnership with three partners, Woody, Sam and Nora. Woody and Sam are general partners; Nora is a limited partner. The partnership agreement provides for the following allocation of profits & losses.,
Woody Sam Nora
Profit-sharing 20% 20% 60%
Loss-sharing 30% 30% 40%
The partnership reports the following liabilities at 12/31.
How are the liabilities allocated to the partners for purposes of calculating their tax bases in their partnership interests?