Joe and Clara contribute property to form JC Partnership on January 1, 2019. Joe contributes land with a basis and FMV of $60,000. The land is encumbered by a $35,000 loan. Clara on the other hand contributed $25,000 cash. During 2019, JC Partnership borrowed $100,000 to construct a parking lot on the land. At the end of 2019, JC Partnership had payables of $10,000 owing to various suppliers. During 2020, JC Partnership paid back all of its loans and payables outstanding and made a distribution to Joe of $120,000 and to Clara of $90,000. JC Partnership had a total net income of $150,000 for 2020. There was zero net income in 2019. Required: First, calculate each of Joe's and Clara's basis in the partnership as of

Joe and Clara contribute property to form JC Partnership on January 1, 2019. Joe contributes land with a basis and FMV of $60,000. The land is encumbered by a $35,000 loan. Clara on the other hand contributed $25,000 cash. During 2019, JC Partnership borrowed $100,000 to construct a parking lot on the land. At the end of 2019, JC Partnership had payables of $10,000 owing to various suppliers. During 2020, JC Partnership paid back all of its loans and payables outstanding and made a distribution to Joe of $120,000 and to Clara of $90,000. JC Partnership had a total net income of $150,000 for 2020. There was zero net income in 2019. Required: First, calculate each of Joe's and Clara's basis in the partnership as of

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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