Greg and Kyle are partners in a general partnership. Greg contributes equipment (FMV = $500; basis = $200). The equipment is 5-yr property (straight-line) and has two years of depreciable life remaining. Kyle contributed $500 cash. Assume the partnership has adopted the remedial allocation method and that over the next five years gross income exactly equals deductible expenses (without considering depreciation). Determine the proper allocation of income and deduction to each partner for the first 5 years. What are the partners’ ending capital accounts?

Greg and Kyle are partners in a general partnership. Greg contributes equipment (FMV = $500; basis = $200). The equipment is 5-yr property (straight-line) and has two years of depreciable life remaining. Kyle contributed $500 cash. Assume the partnership has adopted the remedial allocation method and that over the next five years gross income exactly equals deductible expenses (without considering depreciation). Determine the proper allocation of income and deduction to each partner for the first 5 years. What are the partners’ ending capital accounts?

SWFT Comprehensive Vol 2020

43rd Edition

ISBN:9780357391723

Author:Maloney

Publisher:Maloney

Chapter21: Partnerships

Section: Chapter Questions

Problem 2BCRQ

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Jim and Tyler are equal partners in a general partnership. Jim contributed cash of $200,000. Tyler contributed equipment (FMV = $200,000; basis = $50,000; 5-yr property (straight-line) with two years of depreciable life remaining). Assume the partnership adopts the remedial method with respect to the contribution of the equipment and over the next five years gross receipts from business operations exactly equals deductible expenses (without considering depreciation). Determine the proper allocations of depreciation (book and tax) to each partner for each of the next five years. What are the partners’ ending capital accounts?
Darlene, Eric, and Francis form an equal partnership (DEF). They contributed the following assets: Darlene contributes equipment (FMV = $9,000; basis = $9,000); goodwill (FMV = $15,000; basis = $0); accounts receivable (FMV = $3,000; basis = $0). Darlene has held the equipment for two years and generated the goodwill in her sole proprietorship business, which she has operated for 10 years. Eric contributes cash of $9,000; Whiteacre (FMV = $12,000; basis = $30,000); and Greenacre (FMV = $6,000; basis = $1,500). Eric has held the properties for 3 years prior to contribution. Francis contributes cash of $21,000 and Blackacre (FMV = $6,000; basis = $3,000). Francis held Blackacre for 6 months prior to contribution. Construct an opening tax balance sheet for the DEF partnership. Assets Book Tax Liabilities Book Tax Capital Totals…
As a partner in the new partnership, Allyna contributed her personal computer that cost P900,000 with a book value of P300,000 after four years of use without salvage value. The partners agreed that the said property should have been depreciated over a 10-year useful life. How much will the property be recorded as investment of Allyna?*
Aaron, Deanne, and Keon formed the Blue Bell General Partnership at the beginning of the current year. Aaron and Deanne each contributed $108,000 and Keon transferred an acre of undeveloped land to the partnership. The land had a tax basis of $72,000 and was appraised at $180,000. The land was also encumbered with a $72,000 nonrecourse mortgage for which no one was personally liable. All three partners agreed to split profits and losses equally. At the end of the first year, Blue Bell made a $6,300 principal payment on the mortgage. For the first year of operations, the partnership records disclosed the following information: Sales revenue $ 470,000 Cost of goods sold 450,000 Operating expenses 55,000 Long-term capital gains 2,100 §1231 gains 900 Charitable contributions 300 Municipal bond interest 300 Salary paid as a guaranteed payment to Deanne (not included in expenses) 3,000 a. Compute the adjusted basis of each partner’s interest in the partnership…
Aaron, Deanne, and Keon formed the Blue Bell General Partnership at the beginning of the current year. Aaron and Deanne each contributed $108,000 and Keon transferred an acre of undeveloped land to the partnership. The land had a tax basis of $72,000 and was appraised at $180,000. The land was also encumbered with a $72,000 nonrecourse mortgage for which no one was personally liable. All three partners agreed to split profits and losses equally. At the end of the first year, Blue Bell made a $6,300 principal payment on the mortgage. For the first year of operations, the partnership records disclosed the following information: Sales revenue $ 470,000 Cost of goods sold 450,000 Operating expenses 55,000 Long-term capital gains 2,100 §1231 gains 900 Charitable contributions 300 Municipal bond interest 300 Salary paid as a guaranteed payment to Deanne (not included in expenses) 3,000 Compute the adjusted basis of each partner’s interest in the partnership…
Martin and Hannah form Van Buren Partnership. Each person receives an equal interest in the newly created partnership. Martin contributes $10,000 cash and land ($20,000 A/B; $55,000 FMV). Hannah contributes equipment ($8,000 A/B; $12,000 FMV) and a building ($20,000 A/B; $33,000 FMV). How much gain must the Van Buren Partnership recognize on the transfer of these assets from Martin and Hannah?
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2.
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