Harry and Sally formed the evergreen partnership by contributing the following assets in exchange for a 50 percent capital and profits interest in the partnership: Basis Fair Market Value Harry: Cash $30,000 $30,000 Land $100,000 $120,000 Totals $130,000 $150,000 Sally: Equipment used in business $200,000 $150,000 Totals $200,000 $150,000 How much gain or loss will Harry recognize on the contribution? How much gain or loss will Sally recognize on the contribution? How could the transaction be structured in a different way to get a better result for Sally?
- Harry and Sally formed the evergreen
Basis Fair Market Value
Harry:
Cash $30,000 $30,000
Land $100,000 $120,000
Totals $130,000 $150,000
Sally:
Equipment used in business $200,000 $150,000
Totals $200,000 $150,000
- How much gain or loss will Harry recognize on the contribution?
- How much gain or loss will Sally recognize on the contribution?
- How could the transaction be structured in a different way to get a better result for Sally?
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