Newton is a one-third owner of ProRite Partnership. Newton has decided to sell his interest in the business to Dunja for$68,000 cash plus the assumption of his share of ProRite's liabilities. Assume Newton's inside and outside bases inProRite are equal. ProRite shows the following balance sheet as of the sale date:AssetsCashReceivablesInventoryLandTotalsLiabilities andcapital:LiabilitiesCapital-NewtonCapital-BarbaraCapital-LizTotalsTax Basis$ 96,50028,00040, 25036,500FMV$ 96,50028,000110, 75023,500$ 201, 250 $ 258,750$ 60,00047,08347,08447,083$ 201, 250What are the amount and character of Newton's recognized gain or loss?

Liabilities are the amount to be paid. Liabilities is shared among the partners on the basis of…

Answered: Newton is a one-third owner of ProRite…

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter14: Choice Of Business Entity—operations And Distributions

Section: Chapter Questions

Problem 25P

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P1 is a one-third owner in ABC LLC. P1 sold his interest in ABC to B1 for $95,000 in cash (plus assumption of liabilities of ABC). Assume P1's inside and outside basis in ABC are equal. ABC's balance sheet at the dale of sale follows. Determine the amount and character of the gain or loss P1 will realize at the sale. ASSETS: Cash Receivables Inventory Land LIABILITIES AND CAPITAL: Liabilities Capital-P1 Capital-P2 Capital-P3 Tax Basis 60,000 60,000 120,000 120,000 70,000 130,000 50,000 55,000 300,000 365,000 30,000 90,000 90,000 90,000 FMV 300,000
Matthew and Hein sell to Melges a 1/3 interest in the Matthew - Hein partnership. Melges will pay Matthew and Hein each $141400 for admission into the organization. Before this transaction, Matthew and Hein show capital balances of $209000 each. The journal entry to record the admission of Melges will O show a credit to Melges, Capital for $282800. O show a debit to Hein, Capital for $141400. show a debit to Cash for $282800. O not show a debit to Cash.
Newton is a one-third owner of ProRite Partnership. Newton has decided to sell his interest in the business to Betty for $50,000 cash plus the assumption of his share of ProRite’s liabilities. Assume Newton’s inside and outside bases in ProRite are equal. ProRite shows the following balance sheet as of the sale date: Tax Basis FMV Assets Cash $ 80,000 $ 80,000 Receivables 25,000 25,000 Inventory 40,000 85,000 Land 30,000 20,000 Totals $ 175,000 $ 210,000 Liabilities and capital Liabilities $ 60,000 Capital— Newton 38,333 Capital— Barbara 38,334 Capital— Liz 38,333 Totals $ 175,000 What are the amount and character of Newton’s recognized gain or loss?
After all noncash assets have been converted to cash in the liquidation of MM Partnership, the ledger contains the following account balances: Debit balances: Cash: P 34, 000; Mae, Capital: P 8, 000; Credit balances: A/P: P 25, 000; Mae, Loan: P 9, 000; Mila, Capital: P 8, 000. After paying the A/P of P25, 000, available cash should be distributed to
Craig Roberts purchased one-half of Ennis Leighton’s interest in the Vale and Leighton partnership for $34,000. Prior to the investment, land was revalued to a market value of $130,000 from a book value of $80,000. Tony Vale and Ennis Leighton share net income equally. Leighton had a capital balance of $36,000 prior to these transactions.a. Provide the journal entry for the revaluation of land.b. Provide the journal entry to admit Roberts.
Craig Roberts purchased one-half of Ennis Leighton's interest in the Vale and Leighton partnership for $34,000. Prior to the investment, land was revalued to a market value of $130,000 from a book value of $80,000. Tony Vale and Ennis Leighton share net income equally. Leighton had a capital balance of $36,000 prior to these transactions. a. Provide the journal entry for the revaluation of land.
Craig Roberts purchased one-half of Ennis Leighton’s interest in the Vale and Leighton partnership for $32,400. Prior to the investment, land was revalued to a market value of $161,870 from a book value of $86,860. Tony Vale and Ennis Leighton share net income equally. Leighton had a capital balance of $29,370 prior to these transactions. Required: A. On December 31, provide the journal entry for the revaluation of land.* B. On December 31, provide the journal entry to admit Roberts.* *Refer to the Chart of Accounts for exact wording of account titles. Round your answers to the nearest dollar.
M/s. Al Hilal LLC started with Capital OMR 800,000, Total Tangible Assets OMR 1,000,000 andCurrent Liabilities OMR 100,000 and decided to admit a new partner in the business and also toreceive the amount of goodwill from the incoming partner. The concern wishes to calculate thevalue of goodwill on the basis of four years purchase of the firm by different methods, such asAverage Profit and Super Profit. The books of accounts revealed some information related to pastyears’ profits of 2011 - OMR 15,000, 2012 - OMR 20,000, 2013 - OMR 25,000, 2014 - OMR 30,000,2015 - OMR 35,000, 2017 - OMR 40,000, 2018 - OMR 45,000, 2019 - OMR 50,000. The concernexpects the Rate of Return @ 12.5 % normally.Compute the value of goodwill on the basis of 4 years purchase under Capitalization of AverageProfit Method and Super Profit Method. Which method of goodwill calculation is beneficial forthe firm? Why these two methods showing two different values? Give your comments with thecalculated values.

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