Ally, Nicole, and Jim form a general partnership. Ally acquires a 1/3rd general partnership interest in exchange for a contribution of property with a basis of $150,000 and a fair market value of $540,000, subject to a recourse liability of $180,000. Nicole and Jim each contribute $360,000 cash in exchange for their 1/3rd general partnership interest. Assume that each partner will be allocated 1/3rd of the liability under section 752 following the contribution and the partnership’s assumption of the debt. Determine each partner’s outside basis in the partnership. Prepare the partnership’s books following formation. Assets Book Tax Liabilities Book Tax Capital Book Tax
Ally, Nicole, and Jim form a general partnership. Ally acquires a 1/3rd general partnership interest in exchange for a contribution of property with a basis of $150,000 and a fair market value of $540,000, subject to a recourse liability of $180,000. Nicole and Jim each contribute $360,000 cash in exchange for their 1/3rd general partnership interest. Assume that each partner will be allocated 1/3rd of the liability under section 752 following the contribution and the partnership’s assumption of the debt. Determine each partner’s outside basis in the partnership. Prepare the partnership’s books following formation. Assets Book Tax Liabilities Book Tax Capital Book Tax
Chapter20: Corporations And Parterships
Section: Chapter Questions
Problem 33CE
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Question
- Ally, Nicole, and Jim form a general
partnership . Ally acquires a 1/3rd general partnership interest in exchange for a contribution of property with a basis of $150,000 and a fair market value of $540,000, subject to a recourse liability of $180,000. Nicole and Jim each contribute $360,000 cash in exchange for their 1/3rd general partnership interest.
- Assume that each partner will be allocated 1/3rd of the liability under section 752 following the contribution and the partnership’s assumption of the debt. Determine each partner’s outside basis in the partnership.
- Prepare the partnership’s books following formation.
Assets |
Book |
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Liabilities |
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Tax |
Capital |
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