Mick, Tommy, and Nikki each contributed $500 cash to the MC partnership. The partnership used the cash to purchase land for $1,000; equipment for $300; and a vehicle for $200. Subsequently, when the land is valued $2,500, the equipment is valued at $900, and the vehicle is valued at $200, MC plans to admit Vince to the partnership as 25% partner. Vince will make a cash contribution. Assume MC elects to revalue its assets in accordance with the section 704(b) regulations. How will the book gain be allocated? How much cash should Vince contribute? Update the partnership’s book following Vince’s contribution of cash and the revaluation. *Note – when answering this question assume that neither the equipment nor the vehicle have been subject to depreciation at the time Vince becomes a partner*
Mick, Tommy, and Nikki each contributed $500 cash to the MC
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