2. On January 1, 2022, C and D form an equal partnership to which C contributes machinery with a tax basis of (a) $2,000 and a fair market value of (b) $3,000. D contributes cash of (b) $3000 The machinery is being depreciated on a straight-line basis and has a remaining life of five years. The partnership also has ordinary income of (c) $280 A. Using the traditional method, determine the tax basis and Sec. 704(b) book basis depreciation for C and D for Year 1. Depreciation Depreciation Ordinary income Tax Tax C с Book B. Assume, instead, that the basis of the equipment contributed by C is only (d) $800 at the time of contribution. All the other facts are the same. Using the traditional method with curative allocations, determine the tax basis and Sec. 704(b) book basis depreciation for C and D for Year 1. Also, show the allocation of the ordinary income to C and D for the current year. Tax Book D Tax Book D Book

2. On January 1, 2022, C and D form an equal partnership to which C contributes machinery with a tax basis of (a) $2,000 and a fair market value of (b) $3,000. D contributes cash of (b) $3000 The machinery is being depreciated on a straight-line basis and has a remaining life of five years. The partnership also has ordinary income of (c) $280 A. Using the traditional method, determine the tax basis and Sec. 704(b) book basis depreciation for C and D for Year 1. Depreciation Depreciation Ordinary income Tax Tax C с Book B. Assume, instead, that the basis of the equipment contributed by C is only (d) $800 at the time of contribution. All the other facts are the same. Using the traditional method with curative allocations, determine the tax basis and Sec. 704(b) book basis depreciation for C and D for Year 1. Also, show the allocation of the ordinary income to C and D for the current year. Tax Book D Tax Book D Book

SWFT Individual Income Taxes

43rd Edition

ISBN:9780357391365

Author:YOUNG

Publisher:YOUNG

Chapter20: Corporations And Parterships

Section: Chapter Questions

Problem 58P

See similar textbooks

Similar questions

1. A and B form the equal AB partnership. A contributes property (FMV =$100,000, basis = $60,000) and B contributes $100,000 cash. The property isdepreciated straight line over a 10 year life for both book and tax purposes. Using thetraditional method under Code Sec. 704(c), how much of the tax depreciation in thefirst year will A get? How much will B be allocated? How much of the gain wouldbe allocated to A if the asset is sold for $110,000 at the beginning of year 2?
See Attached
On April 1, 2020, A, B and C formed a partnership by combining their separate business proprietorships. A contributed cash of P 200,000. B contributed property with a carrying amount of P144,000, original cost of P160,000, and a fair value of P320,000. The partnership accepted responsibility for the P140,000 mortgage attached to the property. C contributed equipment with a carrying amount of P120,000, original cost of P300,000 and fair market value of P220,000. The partnership agreement specifies that profits and losses are to be shared equally. Assuming capital is based on their profit and loss agreement, how much is the implied bonus?
A and B form the equal AB partnership. A contributes cash of $20,000. B con- tributes land with a basis of $9,000 and a fair market value of $20,000. The land is a capital asset to B and has been held for over one year. Describe the tax consequences under each of the three I.R.C. §704(c) allocation methods if the partnership sells the land for either $21,000 or $19,000, assuming the partnership has adequate other income and deductions, if necessary.
On March 1, 2020, JM and KK formed a partnership with each contributing the following assets (see attached image) 1. The building is subject to mortgage loan of P800,000, which is to be assumed by the partnership agreement provides that JM and KK share profits and losses 30% and 70%, respectively. On March 1, 2020 the balance in KK's capital account should be: A. 3,700,000 C. 2,900,000B. 3,045,000 D. 2,485,000 2. Assume that the mortgage loan is not assumed by the partnership and the partners agree to withdraw or contribute additional cash to make their capital balances agree with their profit and loss ratio. On March 1, how much cash should be invested/(withdrawn) by KK? A. (1,215,000) C. (655,000)B. (415,000) D. 655,000
n April 30, 2018, Lacson, Yacapin, and Bernal formed a partnership by combining their separate business proprietors. Lacson contributed cash of P50,000. Yacapin contributed property with a P36,000 carrying amount, a P40,000 original cost, and P80,000 fair value. The partnership accepted responsibity for the P35,000 mortgaged attached to the property. Bernal contributed equipment with a P30,000 carrying amount, a P75,000 original cost, and P55,000 fair value. The partnership agreement specifies that profits and losses are to be shared equally but is silent regarding capital contributions. Which partner has the largest capital balance?
Ma1. Morgan and Kristen formed an equal partnership on August 1 of the current year. Morgan contributed $60,000 cash and land with a basis of $18,000 and a fair market value of $40,000. Kristen contributed equipment with a basis of $42,000 and a value of $100,000. Calculate Morgan and Kristen’s basis in the property.
7. Kwong and Morales entered into a partnership as at Mar. 1, 2019 by the investing P125,000 and P75,000, respectively. They agreed that Kwong, as the managing partner, was to receive a salary of P30,000 per year and a bonus computed at 10% of.the profit after adjustment for the salary; the balance of the profit was to be distributed in the ratio of their original capital balances. On Dec. 31, 2019, normal account balances were as follows: Cash P70,000 Accounts Payable P 60,000 125,000 Kwong, Capital Morales, Capital Kwong, Drawing Morales, Drawing Accounts Receivable 67,000 Furniture & Fixtures 45,000 75,000 Sales Returns 5,000 20,000 Purchases 196,000 30,000 Operating Expenses 60,000 Sales 233,000 Inventories on Dec. 31, 2019 were as follows: supplies, P2,500, merchandise, P73,000. Prepaid insurance was P950 while accrued expenses were P1,550. Depreciation rate was 20% per year. The partners' capital balances on Dec. 31, 2019, after closing the profit and drawing accounts, were:
Ashanti Partnership, a mining equipment business, states in its partnership agreement that Jonah and Tutu agree to split profits and losses according to a 40/60 ratio. Additionally, the partnership will provide Jonah with a $15,000 guaranteed payment for services he provides to the partnership. Ashanti Partnership reports the following revenues, expenses, gains, losses, and distributions for its current taxable year: Gain on Sale of Land* $ 4,000 MACRS Depreciation $ 7,500 Charitable Contributions $ 12,500 Sales $ 40,000 Interest Income $ 500 Cost of Goods Sold $ 32,000 Section 179 Expense $ 7,000 Tax-Exempt Income $ 2,000 Other Income $ 5,000 *The land is a Section 1231 asset.Answer the following questions:A. Compute Jonah's share of ordinary income (loss) and separately stated items. Include his self-employment income as a separately stated item.B. Compute Jonah's self-employment income but assume Ashanti Partnership is a limited partnership and Jonah is a…
Kwong and Morales entered into a partnership as at Mar. 1, 2019 by the investing P125,000 andP75,000, respectively. They agreed that Kwong, as the managing partner, was to receive a salary ofP30,000 per year and a bonus computed at 10% of the profit after adjustment for the salary; the balanceof the profit was to be distributed in the ratio of their original capital balances. On Dec. 31, 2019, normalaccount balances were as follows:Cash P70,000 Accounts Payable P 60,000Accounts Receivable 67,000 Kwong, Capital 125,000Furniture and Fixtures 45,000 Morales, Capital 75,000Sales Returns 5,000 Kwong, Drawing 20,000Purchases 196,000 Morales, Drawing 30,000Operating Expenses 60,000 Sales 233,000Inventories on Dec. 31, 2019, were as follows: supplies, P2,500, merchandise, P73,000. Prepaidinsurances was P950 while accrued expenses were P1,550. Depreciation rate was 20% per year. Thepartner’s capital balances on Dec. 31, 2019, after closing the profit and drawing accounts, were:Kwong Moralesa.…
Urmilaben
A and B form the equal AB partnership on January 1 of Year 1. A contributes equipment with a tax basis of $8,000 and a fair market value of $20,000. The equipment has been on a 10-year recovery period and has four years remaining. (Were the equipment newly acquired at the time fo the contribution to the partnership, the recovery period would again be 10 years.) B contributes $20,000, which the partnership uses to buy land. The partnership's income equals expenses except for depreciation deductions. Assuming the partnership uses the remedial allocation method, describe how depreciation deductions will be allocated to A and B from the equipment. Ignore any applicable first year depreciation conventions.