ACCT 540 Assignment 8 Mary and Todd form the MT Partnership, with a transfer of the following properties: Mary $2,000,000 cash Todd $2,000,000 FMV property $1,400,000 tax basis Both Mary and Todd receive a 50% interest in the partnership. They have an agreement that allocates all profits and losses 50% to each member. They also have language in their partnership agreement that satisfies the alternate test for economic effect. REQUIRED: 1. Show the book (704b) and tax basis capital account entries for both Mary and Todd at formation of the partnership. 2. Assume that Todd's contributed property is later sold for $ 2,800,000. No depreciation deductions were claimed. Show the allocation of the book and tax gain from this sale, and explain which one will be reflected on the tax return of the partnership. YOU MUST SHOW CAPITAL ACCOUNTS USING THE SAME FORMAT AS I USED ON THE VIDEO
ACCT 540 Assignment 8 Mary and Todd form the MT Partnership, with a transfer of the following properties: Mary $2,000,000 cash Todd $2,000,000 FMV property $1,400,000 tax basis Both Mary and Todd receive a 50% interest in the partnership. They have an agreement that allocates all profits and losses 50% to each member. They also have language in their partnership agreement that satisfies the alternate test for economic effect. REQUIRED: 1. Show the book (704b) and tax basis capital account entries for both Mary and Todd at formation of the partnership. 2. Assume that Todd's contributed property is later sold for $ 2,800,000. No depreciation deductions were claimed. Show the allocation of the book and tax gain from this sale, and explain which one will be reflected on the tax return of the partnership. YOU MUST SHOW CAPITAL ACCOUNTS USING THE SAME FORMAT AS I USED ON THE VIDEO
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:ACCT 540 Assignment 8
Mary and Todd form the MT Partnership, with a transfer of the
following properties:
Mary $2,000,000 cash
Todd $2,000,000 FMV property
$1,400,000 tax basis
Both Mary and Todd receive a 50% interest in the partnership. They
have an agreement that allocates
all profits and losses 50% to each member. They also have language
in their partnership agreement that
satisfies the alternate test for economic effect.
REQUIRED:
1. Show the book (704b) and tax basis capital account entries for
both Mary and Todd at formation
of the partnership.
2. Assume that Todd's contributed property is later sold for $
2,800,000. No depreciation
deductions were claimed. Show the allocation of the book and tax
gain from this sale, and
explain which one will be reflected on the tax return of the
partnership.
YOU MUST SHOW CAPITAL ACCOUNTS USING THE SAME FORMAT
AS I USED ON THE VIDEO
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