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 BookTaxDebtBookTaxCash5,0005,0005,000Recourse10,00010,000A/R10,00010,000 10,000 Inventory21,00020,00020,000Capital Equipment40,00020,00020,000Angela15,00015,000 Betty15,00015,000 Chris15,00015,000

To solve this problem, we need to calculate Pam's outside basis in her partnership interest and the…

Answered: Angela, Betty, and Chris are equal…

SWFT Essntl Tax Individ/Bus Entities 2020

23rd Edition

ISBN:9780357391266

Author:Nellen

Publisher:Nellen

Chapter14: Partnerships And Limited Liability Entities

Section: Chapter Questions

Problem 22P

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Angela, Betty, and Chris are equal (1/3^rd) 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

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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