Amy and Lena are partners in a general partnership. Amy contributed a tract of land in Manhattan (FMV = $500,000; basis = $400,000) in exchange for a 2/3rd interest in the partnership. Lena contributed $250,000 cash in exchange for 1/3rd interest in the partnership. In the current year, the partnership sold Manhattan for $410,000. Assume the partnership adopted the traditional method. Assume the same facts as problem above, except: (1) the partnership uses the traditional method w/ curative allocations; and (2) the partnership sold a second tract of land, Brooklyn, for $400,000. The partnership purchased Brooklyn more than a year prior for $310,000. Determine the proper allocation of book and tax gain or loss for each partner and determine each partner’s ending capital accounts.
Amy and Lena are partners in a general
Assume the same facts as problem above, except: (1) the partnership uses the traditional method w/ curative allocations; and (2) the partnership sold a second tract of land, Brooklyn, for $400,000. The partnership purchased Brooklyn more than a year prior for $310,000.
Determine the proper allocation of book and tax gain or loss for each partner and determine each partner’s ending capital accounts.
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