XYZ Partnership is equally owned by three partners. X sells his interest to M for $90,000 cash and M assumes X's debt. Before the sale of interest, here is a balance sheet: Basis FMV Cash 150,000 150,000 Accounts Receivable 0 60,000 Capital Assets 30,000 90,000 180,000 300,000 Basis FMV Note Payable 60,000 60,000 X Capital 40,000 80,000 Y Capital 40,000 80,000 Z Capital 40,000 80,000 180,000 300,000 1 Calculate Amount Realized by X 2 Calculate Gain realized by X Calculate Ordinary Income and Capital Gain THIS IS THE ANSWER FROM THE PROFESSOR - HOW DID GET IT???? 1 Calculate Amount Realized by X 110,000 90,000+60,000/3 Cash plus Debt Relief 2 Calculate Gain Realized by X Amount Realized by X 110,000 Basis 60,000 Capital + Share of Liabilities Realized Gain 50,000 Amount Received - Basis
Partnership Accounting
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings, admission of a new partner, etc.
Partner Admission and Withdrawal
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings of a partner, etc.
XYZ
| Basis | FMV | |
| Cash | 150,000 | 150,000 |
| 0 | 60,000 | |
| Capital Assets | 30,000 | 90,000 |
| 180,000 | 300,000 | |
| Basis | FMV | |
| Note Payable | 60,000 | 60,000 |
| X Capital | 40,000 | 80,000 |
| Y Capital | 40,000 | 80,000 |
| Z Capital | 40,000 | 80,000 |
| 180,000 | 300,000 |
1 Calculate Amount Realized by X
2 Calculate Gain realized by X
Calculate Ordinary Income and
THIS IS THE ANSWER FROM THE PROFESSOR - HOW DID GET IT????
| 1 Calculate Amount Realized by X | ||
| 110,000 | 90,000+60,000/3 | Cash plus Debt Relief |
| 2 Calculate Gain Realized by X | ||
| Amount Realized by X | 110,000 | |
| Basis | 60,000 | Capital + Share of Liabilities |
| Realized Gain | 50,000 | Amount Received - Basis |
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