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________________
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________________
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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