Angela, Betty, and Chris are equal (1/3rd) partners in ABC, LLP. The partnership’s current balance sheet and FMV of its assets are below. Angela sells her partnership interest to Pam for $22,000 + assumption of Angela’s share of the partnership debt. Assume all items, including recourse debt, are shared equally. What is Pam’s outside basis in her partnership interest? Assuming the partnership has a section 754 election, what is the amount of the section 743(b) adjustment? Assets FMV Book Tax Debt Book Tax Cash 5,000 5,000 5,000 Recourse 10,000 10,000 A/R 10,000 10,000 10,000 Inventory 21,000 20,000 20,000 Capital Equipment 40,000 20,000 20,000 Angela 15,000 15,000 Betty 15,000 15,000 Chris 15,000 15,000
Angela, Betty, and Chris are equal (1/3rd) partners in ABC, LLP. The partnership’s current balance sheet and FMV of its assets are below. Angela sells her partnership interest to Pam for $22,000 + assumption of Angela’s share of the partnership debt. Assume all items, including recourse debt, are shared equally. What is Pam’s outside basis in her partnership interest? Assuming the partnership has a section 754 election, what is the amount of the section 743(b) adjustment? Assets FMV Book Tax Debt Book Tax Cash 5,000 5,000 5,000 Recourse 10,000 10,000 A/R 10,000 10,000 10,000 Inventory 21,000 20,000 20,000 Capital Equipment 40,000 20,000 20,000 Angela 15,000 15,000 Betty 15,000 15,000 Chris 15,000 15,000
Chapter11: Invest Or Losses
Section: Chapter Questions
Problem 38P
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Question
- Angela, Betty, and Chris are equal (1/3rd) partners in ABC, LLP. The partnership’s current
balance sheet and FMV of its assets are below. Angela sells her partnership interest to Pam for $22,000 + assumption of Angela’s share of the partnership debt. Assume all items, including recourse debt, are shared equally. What is Pam’s outside basis in her partnership interest? Assuming the partnership has a section 754 election, what is the amount of the section 743(b) adjustment?
|
Assets |
FMV |
Book |
Tax |
Debt |
Book |
Tax |
|
Cash |
5,000 |
5,000 |
5,000 |
Recourse |
10,000 |
10,000 |
|
A/R |
10,000 |
10,000 |
10,000 |
|
|
|
|
Inventory |
21,000 |
20,000 |
20,000 |
Capital |
|
|
|
Equipment |
40,000 |
20,000 |
20,000 |
Angela |
15,000 |
15,000 |
|
|
|
|
|
Betty |
15,000 |
15,000 |
|
|
|
|
|
Chris |
15,000 |
15,000 |
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