Liam, Michael and Noah own interests in the LMN Partnership. Their current capital account balances are as follows: Liam $450,000 Michael 350,000 Noah 200.000 Partnership income is shared in a 1:5:4 ratio. Olivia buys a 20% interest in the partnership by acquiring 20% of each existing partner's interest, paying the three partners a total of $300,000. Partnership identifiable net assets are currently reported at amounts approximating fair value. Using the transfer of capital interests approach, Liam's capital balance immediately following admission of Olivia
Liam, Michael and Noah own interests in the LMN Partnership. Their current capital account balances are as follows: Liam $450,000 Michael 350,000 Noah 200.000 Partnership income is shared in a 1:5:4 ratio. Olivia buys a 20% interest in the partnership by acquiring 20% of each existing partner's interest, paying the three partners a total of $300,000. Partnership identifiable net assets are currently reported at amounts approximating fair value. Using the transfer of capital interests approach, Liam's capital balance immediately following admission of Olivia
Chapter10: Partnership Taxation
Section: Chapter Questions
Problem 8MCQ
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Question
Liam, Michael and Noah own interests in the LMN Partnership. Their current capital account balances are as follows:
Liam
$450,000
Michael 350,000
Noah
200.000
Partnership income is shared in a 1:5:4 ratio. Olivia buys a 20% interest in the partnership by acquiring 20% of each existing partner's interest, paying the three partners a total of $300,000.
Partnership identifiable net assets are currently reported at amounts approximating fair value.
Using the transfer of capital interests approach, Liam's capital balance immediately following admission of Olivia is:
Transcribed Image Text:Liam, Michael and Noah own interests in 1
Dam
$450,000
Michael 350,000
Noah 200,000
ship. Their communic
Partnership income is shared in a 1:5:4 ratio. Olivia buys a 20% interest in the partnership by acquiring 20% of each existing partner's interest, paying the three partners a total of $300,000
Partnership identifiable net assets are currently reported at amounts approximating fair value.
Using the transfer of capital interests approach, Liam's capital balance immediately following admission of Olivia is
Select one
a $450,000
b. $360,000
c$405,000
d. $440,000
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Publisher:
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