Answered: A’s outside basis in a partnership is…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

A’s outside basis in a partnership is $20,000. She receives properties C and D in liquidation of his partnership interest. Neither property C and D is inventory or unrealized receivables. Property C’s FMV and adjusted basis to the partnership are $15,000. Property D has an adjusted basis to the partnership of $15,000 and a FMV of $5,000.

What is A’s basis in property C and D following the liquidation of the partnership?

Definition Definition Arrangement between two or more people whereby they agree to manage business operations and share its profits and losses in an agreed ratio. The agreement drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, and drawings of a partner.

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