Partnership Tax Return

California State University, San Bernardino (CSUSB)
Department of Accounting and Finance

ACCT 527/436/536

 

Instructor:                            John R. Dorocak, J.D., LL.M. (Tax), C.P.A.

PARTNERSHIP PROBLEMS

 

  1. Alice and Bob each receive a 50% interest in a general partnership in exchange for the following capital contributions.

 

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Alice                            Bob

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.

 

  1. How much gain/loss is recognized by each partner and the partnership at the date of the partnership formation?

 

  1. What is each partner=s beginning tax basis in his partnership capital account?

 

  1. Set up the partnership=s beginning tax basis and FMV balance sheet.

 

  1. Determine each partner=s beginning tax basis in his partnership interest.

 

  1. What if the liabilities on Bob=s property = 175,000 and FMV = 200,000 – answer A through D

 

  1. 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.

Nonrecourse                   $50,000

Recourse                        10,000

 

How are the liabilities allocated to the partners for purposes of calculating their tax bases in their partnership interests?