Required informationWhen High Horizon LLC was formed, Maude contributed the following assets in exchange for a 25percent capital and profits interest in the LLC:FairMarketValueBasisMaude:CashLand*$ 20,000 20,000100,000 360,000Totals$120,000 $380,000Nonrecourse debt secured by the land equals $160,000James, Harold, and Jenny each contributed $220,000 in cash for a 25 percent profits and capitalinterest. (Leave no answer blank. Enter zero if applicable.)d. What is High Horizon's tax basis in its assets?Tax basis

When Partemreship is formed and afterwards, partners may transfer cash , other tangible or…

Answered: Required information When High Horizon…

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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*On June 1, Jaden contributed $7,000 and property, with an adjusted basis of $9,000 and a fair market value of $15,000, for a 20% share of Retro Classics, a business organized as a partnership. What is Jaden's beginning basis? (a) $7,000 (b) $9,000 (c) $16,000 (d) $22,000
Suzy contributed assets valued at $360,000 (basis of $200,000) in exchange for her 40% interest in Suz-Anna GP (a general part- nership in which both partners are active owners). Anna contributed land and a building valued at $640,000 (basis of $380,000) in exchange for the remaining 60% interest. Anna’s property was encumbered by qualified nonrecourse financing of $100,000, which was assumed by the partnership. The partnership reports the following income and expenses for the current tax year: Sales $560,000 Utilities, salaries, depreciation, and other operating expenses 360,000Short-term capital gain 10,000 Tax-exempt interest income 4,000 Charitable contributions (cash)…
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Corporate Organization Exercise Kathy and Carl formed a corporation by each contributing an asset with a FMV of $50,000 for half of the stock in the corporation. Prior to the transfer, Kathy had an adjusted basis of $40,000 in her asset and Carl had an adjusted basis of $60,000 in his asset. h. Does Carl have any positive or negative consequences if the corporation sells Kathy's asset for $50,000 ? Quantify the impact assuming the corporation's marginal tax rate is 21%. Answer the following assuming Carl and the corporation did not make the election i. What is Carl's realized loss on the transaction?
Required Information [The following information applies to the questions displayed below.] Julio and Milania are owners of Falcons Corporation, an S corporation. Each owns 50 percent of Falcons Corporation. In year 1, Julio and Milania each received distributions of $12,000 from Falcons Corporation. Sales revenue Cost of goods sold Falcons Corporation (an S Corporation) Income Statement December 31, Year 1 and Year 2 Salary to owners Julio and Milania Employee wages Depreciation expense Section 179 expense Interest income (related to business income) Municipal bond income Government fines Overall net income Distributions Ordinary Income Amount Year 1 $ 335,000 (42,000) (40,000) (30,000) (20,000) (30,000) 12,000 1,808 Allocated to Julio 0 $ 186,800 $ 24,000 a. What amount of ordinary income and separately stated items are allocated to them for year 1 based on the information above? Assume that Falcons Corporation has $240,000 of qualified property (unadjusted basis). Year 2 $ 465,000…
hen Bruno's basis in his LLC interest is $283,800, he receives cash of $113,520, a proportionate share of inventory, and land in a distribution that liquidates both the LLC and his entire LLC interest. The inventory has a basis to the LLC of $70,950 and a fair market value of $90,816. The land's basis is $127,710, and the fair market value is $113,520. How much gain or loss does Bruno recognize, and what is his basis in the inventory and land received in the distribution? If an amount is zero, enter "0". Bruno recognizes (a gain, loss, neither a gain or loss) of $_____________. Bruno's basis in the inventory is $_______________ and his basis in the land is $___________________.
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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?
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Required information [The following information applies to the questions displayed below.] Aaron, Deanne, and Keon formed the Blue Bell General Partnership at the beginning of the current year. Aaron and Deanne each contributed $124,000 and Keon transferred an acre of undeveloped land to the partnership. The land had a tax basis of $56,000 and was appraised at $180,000. The land was also encumbered with a $56,000 nonrecourse mortgage for which no one was personally liable. All three partners agreed to split profits and losses equally. At the end of the first year, Blue Bell made a $7,200 principal payment on the mortgage. For the first year of operations, the partnership records disclosed the following information: $ 480,000 470,000 70,000 1,500 600 Sales revenue Cost of goods sold Operating expenses Long-term capital gains §1231 gains Charitable contributions 300 Municipal bond interest Salary paid as a guaranteed payment to Deanne (not included in expenses) 300 3,000 c. Using the…
On January 1, 2021 David contributed $25,000 cash and building with a basis of $100,000 and a FMV of $165,000 in exchange for 50% interest in partnership XYZ LLC. XYZ had the following activty for 2021: Ordinary Income: $140,000 Operating expenses: $60,000 Interest Income: $10,000 Nondeductible Expenses: 5,000 What is David's outside basis in XYZ LLC on December 31, 2021? 232,500 170,000 167,500 210,000

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