In each of the following problems, discuss fully the relevant tax codes and doctrines and or concepts and critically analyze each situation fully. A, B, C, and D form a general partnership in which they each have an equal interest in capital and profits. All the partners and the partnership are cash method taxpayers. In exchange for their respective partnership interests, each partner transfers the following assets, all of which have been held long-term: Partner Asset Adjusted Basis FMV A Land $30,000 $70,000 Goodwill 0 22,000
In each of the following problems, discuss fully the relevant tax codes and doctrines and or concepts and critically analyze each situation fully.
- A, B, C, and D form a general
partnership in which they each have an equal interest in capital and profits. All the partners and the partnership are cash method taxpayers. In exchange for their respective partnership interests, each partner transfers the following assets, all of which have been held long-term:
Partner Asset Adjusted Basis FMV
A Land $30,000 $70,000
Auto previously held
for personal use 10,000 8,000
B Equipment (all
sect. 1245 gain) 25,000 45,000
Installment note
from the sale of
land 20,000 25,000
Inventory 5,000 30,000
C Building (subject to
$20,000 of sect. 1250
gain) 25,000 60,000
Land 25,000 10,000
Receivables for services
rendered to E 0 30,000
D Cash 100,000 100,000
(b) What are the tax consequences (consider only gain recognized, basis, and holding period) to the partnership.
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