Al, Bob, and Charlie are equal partners in the ABC partnership. Al's outside basis is $250 and ABC's balance sheet is as follows: Cash Account Receivables Inventory Machinery Building Stock Goodwill Total Assets Adjusted Basis $240 $75 $90 $55 $200 $90 $0 $750 FMV $240 $60 $150 $100 $500 $300 $300 $1,650 Liabilities $150" *100% of the gain is subject to depreciation recapture ** The liabilities are recourse debt and shared equally by the partners Al sells his partnership interest to Dave for $500 plus the assumption of Al's share of partnership liabilities. How much gain will Al recognize on the sale, and what is the charact: of that gain? After the purchase, what is Dave's initial outside basis?
Al, Bob, and Charlie are equal partners in the ABC partnership. Al's outside basis is $250 and ABC's balance sheet is as follows: Cash Account Receivables Inventory Machinery Building Stock Goodwill Total Assets Adjusted Basis $240 $75 $90 $55 $200 $90 $0 $750 FMV $240 $60 $150 $100 $500 $300 $300 $1,650 Liabilities $150" *100% of the gain is subject to depreciation recapture ** The liabilities are recourse debt and shared equally by the partners Al sells his partnership interest to Dave for $500 plus the assumption of Al's share of partnership liabilities. How much gain will Al recognize on the sale, and what is the charact: of that gain? After the purchase, what is Dave's initial outside basis?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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HELP ASAP!
1. how much gain will AL recognize and what is the character of that gain?
2. what is Daves initial outside basis?
Transcribed Image Text:Al, Bob, and Charlie are equal partners in the ABC partnership. Al's outside basis is $250 and
ABC's balance sheet is as follows:
Cash
Account Receivables
Inventory
Machinery
Building
Stock
Goodwill
Total
Assets
Adjusted Basis
$240
$75
$90
$55
$200
$90
$0
$750
FMV
$240
$60
$150
$100
$500
$300
$300
$1,650
Liabilities
$150"
*100% of the gain is subject to depreciation recapture
** The liabilities are recourse debt and shared equally by the partners
Al sells his partnership interest to Dave for $500 plus the assumption of Al's share of
partnership liabilities. How much gain will Al recognize on the sale, and what is the character
of that gain? After the purchase, what is Dave's initial outside basis?
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