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

SWFT Individual Income Taxes
43rd Edition
ISBN:9780357391365
Author:YOUNG
Publisher:YOUNG
Chapter20: Corporations And Parterships
Section: Chapter Questions
Problem 33CE
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  1. 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.

 

  1. 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.

 

  1. Prepare the partnership’s books following formation.

 

 

Assets

Book

Tax

Liabilities

Book

Tax

           
     

Capital

Book

Tax

           
           
           

 

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