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.
Chapter20: Corporations And Parterships
Section: Chapter Questions
Problem 33CE
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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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