Ellen, Denny, John, and Michelle are equal partnersin a partnership that has the following assets: (i) $10,000 of cash, (ii) inventory with a tax basis of $10,000 and a value of $50,000, and (iii) land with atax basis of $100,000 and a value of $60,000. Eachpartner has an outside basis of $30,000. Assumingthe partnership bas a §754 election in effect, whatare the tax consequences if Ellen sells her interest toPickens for $30,000 ?

When Ellen sells her partnership interest to Pickens for $30,000, and the partnership has a $754…

Answered: Ellen, Denny, John, and Michelle are…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Shirley contributes property to a new partnership with a value of $1,000,000 and a basis of $400,000 that is secured by a $500,000 nonrecourse note. Under the terms of the partnership agreement, Shirley will be allocated 25% of all profits. The partnership agreement also states that "excess nonrecourse liabilities" will be allocated to partners according to profit ratios. How much of the nonrecourse liability will be allocated to Shirley? please dont provide answer in images thank you
In each of the following independent liquidating distributions in which the partnership also liquidates determine the amount and character of any gain or loss to be recognized by each partner and the basis of each asset (other than cash) received. In each case, assume that distributions of hot assets are proportionate to the partners. Be sure to explain your rationale. c. Neil has a partnership basis of $100,000 and receives $40,000 of cash, inventory with a basis to the partnership of $30,000, and a capital asset with a partner- ship basis of $20,000. The inventory and capital asset have fair market values of $20,000 and $30,000, respectively. d. Oscar has a partnership basis of $40,000 and receives a distribution of $10,000 of cash and an account receivable with a basis of $0 to the partnership (value is $15,000).
Milton has a basis in his partnership of $300,000, including his $80,000 share of partnership liabilities. At the end of the current year the partnership pays off the liabilities and makes a proportionate current distribution to its partners. Milton receives a parcel of land (partnership basis of $120,000 and FMV of $135,000) and inventory (partnership basis of $160,000 and FMV of $180,000). Following the distribution what is Milton's basis in the inventory? I'm not sure if it's 160,000 or not
SEE ATTACHED
1. A, B and C, three individuals, form a general partnership by contributing the following property in exchange for equal 1/3 interests in the partnership's capital, profits, and losses: A contributes land, a capital asset that A acquired several years ago, worth $100 in which A has a tax basis of $40. contributes machinery with a basis of $25 and a value of $60, plus $40 in cash. purchased the machinery several years ago for $75 and has taken $50 of depreciation. contributes inventory with a value of $100 in which has a basis of $90. What gain and/or loss will be recognized by the partners and the partnership on formation? What will be the partnership's "inside basis" and holding period for each of the contributed assets? What will be the partners' "outside bases" and holding period for their partnership interests?
Amy and Mitchell are equal partners in the accrual basis AM Partnership.At the beginning of the current year, Amys capital account has a balance of $300,000, and the partnership has recourse debts of $200,000 payable to unrelated parties. Assume that all partnership recourse debt is shared equally between the partners. The following information about AMs operations for the current year is obtained from the partnerships records.Ordinary income$400,000Interest income$4,000Long-term capital loss$6,000Short-term capital gain$12,000Charitable contribution$4,000Cash distribution to Amy$20,000Assume that year-end partnership debt payable to unrelated parties is $140,000. If all transactions are reflected in her beginning capital and basis in the same manner, what is Amy basis in the partnership interest:At the beginning of the year?At the end of the year?What income, gains, losses, and deductions does Amy report on her income tax return?Based on the information provided, what other…
Please show work 1. Nan and Lew formed an equal partnership. Nan contributes property with an adjusted basis of $75,000 to a partnership. The property has a fair market value of $120,000 on the date of the contribution. a. What is the partnership’s basis in the property contributed by Nan? $ _________________ b. What is the amount of gain recognized by Nan in this transaction? $ __________________ c. Lew performs services valued at $105,000 for the partnership for his one-third interest in the partnership. Income or gain recognized $____________ His basis in the Partnership interest $____________
Eddie and Elizabeth are equal partners in a partnership that owns (i) publicly traded stock held for investment with a tax basis of $500,000 and a value of $550,000 and (ii) other assets, which are capital assets, that have a tax basis of $1,000,000 and a value of $200,000. If Eddie, a dealer in publicly traded stock who bas an outside basis of $750,000, sells his interest in the partnership to Richard for $375,000, how much gain or loss is recognized? What is the character of the gain or loss?
Misha receives a proportionate nonliquidating distribution when the basis of her partnership interest is $60,000. The distribution consists of $80,000 cash and inventory (adjusted basis to the partnership of $10,000, fair market value of $20,000). How much gain or loss does Misha recognize, and what is her basis in the distributed inventory and in her partnership interest following the distribution?
This year, Alex’s distributive share from Eden Lakes Partnership includes $8,000 of interest income, $4,000 of net long-term capital gains, $2,000 net §1231 gain from the sale of property used in the partnership’s trade or business, and $83,000 of ordinary business income.a. Assume that Alex materially participates in the partnership. How much of his distributive share from Eden Lakes Partnership is potentially subject to the net investment income tax?

Recommended textbooks for you

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

Horngren's Cost Accounting: A Managerial Emphasis…

Accounting

ISBN:

9780134475585

Author:

Srikant M. Datar, Madhav V. Rajan

Publisher:

PEARSON

Intermediate Accounting

Accounting

ISBN:

9781259722660

Author:

J. David Spiceland, Mark W. Nelson, Wayne M Thomas

Publisher:

McGraw-Hill Education

Financial and Managerial Accounting

Accounting

ISBN:

9781259726705

Author:

John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS