Hannah, Rose, and Rachael form an equal general partnership. Hannah and Rose each contribute $40,000 cash. Rachael contributes land with a basis of $48,000 and a fair market value of $100,000, subject to a nonrecourse liability of $60,000. Under section 752, assume that the liability will be allocated to the partners as follows: Hannah ($16,000); Rose ($16,000); and Rachael ($28,000). Prepare the partnership’s books following formation. *hint* - a partner’s tax capital account can be negative Assets Book Tax Liabilities Book Tax Capital Book Tax Determine each partner’s outside basis in the partnership.
Hannah, Rose, and Rachael form an equal general partnership. Hannah and Rose each contribute $40,000 cash. Rachael contributes land with a basis of $48,000 and a fair market value of $100,000, subject to a nonrecourse liability of $60,000. Under section 752, assume that the liability will be allocated to the partners as follows: Hannah ($16,000); Rose ($16,000); and Rachael ($28,000). Prepare the partnership’s books following formation. *hint* - a partner’s tax capital account can be negative Assets Book Tax Liabilities Book Tax Capital Book Tax Determine each partner’s outside basis in the partnership.
Chapter21: Partnerships
Section: Chapter Questions
Problem 28P
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Question
- Hannah, Rose, and Rachael form an equal general partnership. Hannah and Rose each contribute $40,000 cash. Rachael contributes land with a basis of $48,000 and a fair market value of $100,000, subject to a nonrecourse liability of $60,000.
- Under section 752, assume that the liability will be allocated to the partners as follows: Hannah ($16,000); Rose ($16,000); and Rachael ($28,000). Prepare the partnership’s books following formation.
*hint* - a partner’s tax capital account can be negative
Assets |
Book |
Tax |
Liabilities |
Book |
Tax |
Capital |
Book |
Tax |
|||
- Determine each partner’s outside basis in the partnership.
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ISBN:
9780357109731
Author:
Hoffman
Publisher:
CENGAGE LEARNING - CONSIGNMENT