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e1. Suppose Westlake has a §754 election in place. What is Michelle's special basis adjustment? e2. Suppose Westlake has a §754 election in place. How much gain or loss would Michelle recognize on a subsequent sale of the land in this situation?

e1. Suppose Westlake has a §754 election in place. What is Michelle's special basis adjustment? e2. Suppose Westlake has a §754 election in place. How much gain or loss would Michelle recognize on a subsequent sale of the land in this situation?

FINANCIAL ACCOUNTING
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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Michelle pays $183,000 cash for Brittany's one-third interest in the Westlake Partnership. Just prior to the sale, Brittany's basis in Westlake is $96,300. Westlake reports the following balance sheet: Таx Basis FMV Assets $ 96,300 192,600 $ 288,900 $ 96,300 452,700 Cash Land Totals $ 549,000 Liabilities and capital Capital-Amy Capital-Brittany Сapital-Ben $ 96,300 $ 96,300 $ 96,300 $ 288,900 Totals (Leave no answer blank. Enter zero if applicable.) e1. Suppose Westlake has a §754 election in place. What is Michelle's special basis adjustment? e2. Suppose Westlake has a §754 election in place. How much gain or loss would Michelle recognize on a subsequent sale of the land in this situation? Complete this question by entering your answers in the tabs below. Req E1 Req E2 Suppose Westlake has a §754 election in place. What is Michelle's special basis adjustment? Special basis adjustment
Transcribed Image Text:Michelle pays $183,000 cash for Brittany's one-third interest in the Westlake Partnership. Just prior to the sale, Brittany's basis in Westlake is $96,300. Westlake reports the following balance sheet: Таx Basis FMV Assets $ 96,300 192,600 $ 288,900 $ 96,300 452,700 Cash Land Totals $ 549,000 Liabilities and capital Capital-Amy Capital-Brittany Сapital-Ben $ 96,300 $ 96,300 $ 96,300 $ 288,900 Totals (Leave no answer blank. Enter zero if applicable.) e1. Suppose Westlake has a §754 election in place. What is Michelle's special basis adjustment? e2. Suppose Westlake has a §754 election in place. How much gain or loss would Michelle recognize on a subsequent sale of the land in this situation? Complete this question by entering your answers in the tabs below. Req E1 Req E2 Suppose Westlake has a §754 election in place. What is Michelle's special basis adjustment? Special basis adjustment
Michelle pays $183,000 cash for Brittany's one-third interest in the Westlake Partnership. Just prior to the sale, Brittany's basis in Westlake is $96,300. Westlake reports the following balance sheet: Тах Basis FMV Assets $ 96,300 192,600 $ 288,900 $ 96,300 452,700 $ 549,000 Cash Land Totals Liabilities and capital Capital-Amy Capital-Brittany Сapital-Ben $ 96,300 $ 96,300 $ 96,300 $ 288,900 Totals (Leave no answer blank. Enter zero if applicable.) e1. Suppose Westlake has a §754 election in place. What is Michelle's special basis adjustment? e2. Suppose Westlake has a §754 election in place. How much gain or loss would Michelle recognize on a subsequent sale of the land in this situation? Complete this question by entering your answers in the tabs below. Req E1 Req E2 Suppose Westlake has a §754 election in place. How much gain or loss would Michelle recognize on a subsequent sale of the land in this situation? Neither gain nor loss recognized
Transcribed Image Text:Michelle pays $183,000 cash for Brittany's one-third interest in the Westlake Partnership. Just prior to the sale, Brittany's basis in Westlake is $96,300. Westlake reports the following balance sheet: Тах Basis FMV Assets $ 96,300 192,600 $ 288,900 $ 96,300 452,700 $ 549,000 Cash Land Totals Liabilities and capital Capital-Amy Capital-Brittany Сapital-Ben $ 96,300 $ 96,300 $ 96,300 $ 288,900 Totals (Leave no answer blank. Enter zero if applicable.) e1. Suppose Westlake has a §754 election in place. What is Michelle's special basis adjustment? e2. Suppose Westlake has a §754 election in place. How much gain or loss would Michelle recognize on a subsequent sale of the land in this situation? Complete this question by entering your answers in the tabs below. Req E1 Req E2 Suppose Westlake has a §754 election in place. How much gain or loss would Michelle recognize on a subsequent sale of the land in this situation? Neither gain nor loss recognized
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Special basis adjustement= Basis in Partnership Interest- Inside basis of partnership

 

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