Dewey, Huey, and Louie created the Sleepy Times partnership to sell pajamas. TheSleepy Times partnership has the following balance sheet:Unrealized receivablesInventoryLandCapital, DeweyCapital, HueyCapital, LouieBasis0120,00060.000$180,000$60,00060,00060.000$180,000beFMV$30,000150,00090.000$270,000$90,00090,000At his request, Dewey receives a distribution consisting of % of the unrealizedreceivables and % of the inventory, reducing his interest in the partnership from1/3 to 1/5. You are going to calculate the tax effects of this distribution toDewey and the partnership.Under 751(b), Dewey is first treated as having been distributed $AV of land in a hypothetical90.000$270,000distribution.Dewey's basis in the hypothetically distributed land is $Sleepy Times is treated as having bought back the land with $A/A/ of unrealized receivables and $of inventory.Dewey will have a gain on the IRC Sec. 751(b) exchange of $A/and the character of the gain willSleepy Times will have a gain on the IRC Sec. 751(b) exchange of $A/ and the character of the gain will beDewey's total basis in the inventory distributed (from the 751(b) exchange and thenormal distribution) is $A/Dewey's total basis in the unrealized receivables distributed (from the 751(b)exchange and the normal distribution) is $AVDewey's remaining basis in his partnership interest is $The Sleepy Times partnership will have a basis in the land of $

Dewey, Huey, and Louie have formed the Sleepy Times Partnership to sell pajamas. The partnership's…

Dewey, Huey, and Louie created the Sleepy Times partnership to sell pajamas. The Sleepy Times partnership has the following balance sheet: Unrealized receivables Inventory Land Capital, Dewey Capital, Huey Capital, Louie Basis 0 120,000 60.000 $180,000 $60,000 60,000 60.000 $180,000 FMV $30,000 150,000 90,000 $270,000 $90,000 90,000 90.000 $270,000 At his request, Dewey receives a distribution consisting of % of the unrealized receivables and % of the inventory, reducing his interest in the partnership from 1/3 to 1/5. You are going to calculate the tax effects of this distribution to Dewey and the partnership. Under 751(b), Dewey is first treated as having been distributed $

Dewey, Huey, and Louie created the Sleepy Times partnership to sell pajamas. The Sleepy Times partnership has the following balance sheet: Unrealized receivables Inventory Land Capital, Dewey Capital, Huey Capital, Louie Basis 0 120,000 60.000 $180,000 $60,000 60,000 60.000 $180,000 FMV $30,000 150,000 90,000 $270,000 $90,000 90,000 90.000 $270,000 At his request, Dewey receives a distribution consisting of % of the unrealized receivables and % of the inventory, reducing his interest in the partnership from 1/3 to 1/5. You are going to calculate the tax effects of this distribution to Dewey and the partnership. Under 751(b), Dewey is first treated as having been distributed $

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: Required information When High Horizon LLC was formed, Maude contributed the following assets in…

A: Step1: Calculation of the each member's initial tax basis in the LLC. We have,

Q: XYZ Partnership begins the liquidation process with the following balance sheet and profit and loss…

A: Assuming non-cash assets realized to its value Total Cash available = 280000 + 300000 = 580000

Q: blanaces of accounts for M&M partnership are cash 34000 account payable (25000) loan to Matter…

A: It is an agreement between two or more parties to conduct the business and share the profits and…

Q: Required information When High Horizon LLC was formed, Maude contributed the following assets in…

A: Tax basis of Maude is difference between his basis before the debt relief and relief occurred due to…

Q: The XYZ partnership has the following balance sheet: Basis FMV Land $60,000 $81,000…

A: When investment interest is sold, then capital gain or loss is recognized. Nature of capital gain or…

Q: A partnership has the following capital balances: Comprix (40% of gains and losses) $ 180,000…

A: Value of company = Amount bought in by Mahar /Share of Mahar Value of company = $280,000 / 25%…

Q: Phox and Ranch have decided to form a partnership. They are in the process of agreeing on how the…

A: Partnership: Partnership is a form of business organization in which two or more two individuals…

Q: The Keller, Long, and Mason partnership had the following balance sheet just before entering…

A: The agreement which is made by more than two or two persons for carrying an objective and for a…

Q: XYZ Partnership is equally owned by three partners. X sells his interest to M for $90,000 cash and M…

Q: 35,000 $455,000 Ey secured by the land equals

A: Answer : Calculate gain or loss Kevan will recognize :

Q: The Spirit Partnership owns the following assets on October 1 of the current year: Assets…

A: Introduction The price a goods might sell for it on the market place, assuming that both the buyer…

Q: After realization and payment of external debt, how much cash would the partnership have left for…

Q: Required information When High Horizon LLC was formed, Maude contributed the following assets in…

A: When Partemreship is formed and afterwards, partners may transfer cash , other tangible or…

Q: Question #2: Toto profit 56,000 The ABCD Partnership has the following balance sheet at January 1,…

A: Partnership is an arrangement where the parties ,known as business partners , agree to cooperate to…

Q: Penner and Torres decide to merge their proprietorships into a partnership called Crane Company. The…

A: Balance sheet is the financial statement prepared by an entity to show its financial position. It…

Q: A&B form a partnership with A being the limited partner (LP)who will invest $150,000 and B being the…

A: A limited partner is a partner who has invested in a company but does not take part in the…

Q: The partnership of Kylie, Bamboo and Tank is being liquidated. The summarized balance sheet below…

A: Partnership means where two or more person comes together to form the business and share profit and…

Concept explainers

Partnership Accounting

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

Partner Admission and Withdrawal

A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is 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, drawings of a partner, etc.

Question

Dewey, Huey, and Louie created the Sleepy Times partnership to sell pajamas. The
Sleepy Times partnership has the following balance sheet:
Unrealized receivables
Inventory
Land
Capital, Dewey
Capital, Huey
Capital, Louie
Basis
0
120,000
60.000
$180,000
$60,000
60,000
60.000
$180,000
be
FMV
$30,000
150,000
90.000
$270,000
$90,000
90,000
At his request, Dewey receives a distribution consisting of % of the unrealized
receivables and % of the inventory, reducing his interest in the partnership from
1/3 to 1/5. You are going to calculate the tax effects of this distribution to
Dewey and the partnership.
Under 751(b), Dewey is first treated as having been distributed $
AV of land in a hypothetical
90.000
$270,000
distribution.
Dewey's basis in the hypothetically distributed land is $
Sleepy Times is treated as having bought back the land with $
A/
A/ of unrealized receivables and $
of inventory.
Dewey will have a gain on the IRC Sec. 751(b) exchange of $
A/
and the character of the gain will
Sleepy Times will have a gain on the IRC Sec. 751(b) exchange of $
A/ and the character of the gain will be
Dewey's total basis in the inventory distributed (from the 751(b) exchange and the
normal distribution) is $
A/
Dewey's total basis in the unrealized receivables distributed (from the 751(b)
exchange and the normal distribution) is $
AV
Dewey's remaining basis in his partnership interest is $
The Sleepy Times partnership will have a basis in the land of $

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1: Introduction

VIEW

Step 2: Dewey's Tax on Capital Gain/Loss & Partnership's Tax on Gain/Loss

VIEW

Solution

VIEW

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

Munabhai
The Drysdale, Koufax, and Marichal partnership has the following balance sheet immediately prior to liquidation: Cash $ 61,000 Liabilities $ 55,000 Noncash assets 329,000 Drysdale, loan 42,500 Drysdale, capital (50%) 107,500 Koufax, capital (30%) 97,500 Marichal, capital (20%) 87,500 a-1. Determine the maximum loss that can be absorbed in Step 1. Then, assuming that this loss has been incurred, determine the next maximum loss that can be absorbed in Step 2. a-2. Liquidation expenses are estimated to be $21,000. Prepare a predistribution schedule to guide the distribution of cash. Further, modify the tags in explanation as well. b. Assume that assets costing $99,000 are sold for $72,500. How is the available cash to be divided?
i need the answer quickly
The Drysdale, Koufax, and Marichal partnership has the following balance sheet immediately prior to liquidation: Cash Noncash assets $ 41,000 229,000 Liabilities Drysdale, loan Drysdale, capital (50%) Koufax, capital (30%) Marichal, capital (20%) $46,500 21,000 77,500 67,500 57,500 a-1. Determine the maximum loss that can be absorbed in Step 1. Then, assuming that this loss has been incurred, determine the next maximum loss that can be absorbed in Step 2. a-2. Liquidation expenses are estimated to be $20,000. Prepare a predistribution schedule to guide the distribution of cash. Further, modify the tags in explanation as well. b. Assume that assets costing $79,000 are sold for $62,500. How is the available cash to be divided?
blanaces of accounts for M&M partnership are cash 34000 account payable (27000) loan to Matter (7000) Matter capital 8000 Mansour capital (8000) avaliable cash should distributed as follows after payment 25000 to account payables: ○ A. 7000 to Mansour O B. 7000$ for loan of Matter O c. $3500 each to Matter and Mansour OD. 1000 to Matter and 7000 to Mansour
The Drysdale, Koufax, and Marichal partnership has the following balance sheet immediately prior to liquidation: Cash $ 37,000 Liabilities $ 49,000 Noncash assets 209,000 Drysdale, loan 12,500 Drysdale, capital (50%) 71,500 Koufax, capital (30%) 61,500 Marichal, capital (20%) 51,500 a-1. Determine the maximum loss that can be absorbed in Step 1. Then, assuming that this loss has been incurred, determine the next maximum loss that can be absorbed in Step 2. a-2. Liquidation expenses are estimated to be $16,000. Prepare a predistribution schedule to guide the distribution of cash. Further, modify the tags in explanation as well. b. Assume that assets costing $75,000 are sold for $60,500. How is the available cash to be divided?
1 John and Mary are equal partnership in a partnership. John's beginning basis is 50,000 and Mary's beginning basis is 70,000 Sales 200,000 Long term capital gain Short term capital loss 6,000 -4,000 Dividend income 2,000 salaries 50,000 Rent Expense 20,000 Interest income 5,000 Depreciation Section 179 expense 30,000 20,000 Distribution to Mary 40,000 Distrbution to John 30,000 1 Calculate ordinary income 2 Calculate Separately Reported Items 3 Calculate ending basis for John and Mary.