Luis, Gabi, and Katherine form a partnership. Luis and Gabi give equipment and a building, respectively. Katherine agrees to perform all of the accounting and office work in exchange for a 10% interest.   FMV Basis Partnership % Luis’s equipment $ 66,000 $ 11,000 45% Gabi’s building $ 66,000 $ 44,000 45% Katherine’s services $ 0 $ 0 10% Required:

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Luis, Gabi, and Katherine form a partnership. Luis and Gabi give equipment and a building, respectively. Katherine agrees to perform all of the accounting and office work in exchange for a 10% interest.

  FMV Basis Partnership %
Luis’s equipment $ 66,000 $ 11,000 45%
Gabi’s building $ 66,000 $ 44,000 45%
Katherine’s services $ 0 $ 0 10%

Required:

  1. What amount of gain, if any, do each of the partners recognize? Note: Leave no cells blank - be certain to enter "0" wherever required.
  2. What is the basis for each partner in his or her partnership interest?
  3. What is the basis to the partnership of each asset?
 
Asset
Basis
Equipment
Building
Transcribed Image Text:Asset Basis Equipment Building
Luis
Gabi
Partner
Basis
Katherine
Partner
Gain
Luis
Gabi
Katherine
Transcribed Image Text:Luis Gabi Partner Basis Katherine Partner Gain Luis Gabi Katherine
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