Answered: a) On January 1st of this year, Helen…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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2) Basis a) On January 1st of this year, Helen acquired a 1/4 interest in Treadwell LLC (a partnership). Helen contributed some land she held for investment. She purchased the land for $200,000, but the land increased in value and was worth $220,000 on the date of contribution. A few years later, Treadwell LLC sells the land for $320,000. At the beginning of that year, Helen’s capital account was $200,000. 1. Compute the gain or loss to Treadwell LLC when it sold the land_____________________ 2. Compute the capital account for Helen immediately after the sale________________ b) Helen’s basis in Monarch is 30,000 at the beginning of the tax year, and she owns 20% of the business. During the year, Monarch had the following items: Ordinary Income: Tax-Free Interest Income: Penalties and fines: Loan 1 (from Helen to Monarch): Loan 2 (from Greedy Bank to Monarch): Compute the following: If Monarch is a partnership, Helen’s partnership year______________________________ 10,000 20,000 15,000 20,000 20,000 interest basis at the end of the If Monarch is an S-Corp, Helen’s stock basis at the end of the year______________________________ If Monarch is an S-Corp, Helen’s loan basis at the end of the hear____ Part b

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