CONCEPTS IN FED.TAX.,2020-W/ACCESS
CONCEPTS IN FED.TAX.,2020-W/ACCESS
20th Edition
ISBN: 9780357110362
Author: Murphy
Publisher: CENGAGE L
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Chapter 2, Problem 22P
To determine

Identify the related parties.

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Sandy and Dan own 40% and 60%, respectively, of the SD Partnership, which manufactures clocks. The partnership is a limited partnership, and Sandy is the only general partner. She works full-time in the business. Dan essentially is an investor in the firm and works ful-time at another job. Dan has no other income except his salary from his full-time employer. During the current year, the partnership reports the following gain and loss: E (Click the icon to view the gain and loss.) 1 (Click the icon to view additional information.) Read the requirements Requirement a. What gain or loss should each partner report on his or her individual tax return? Begin by determining the amount and character of gain or loss Sandy should report. Character Amount - X Requirements What gain or loss should each partner report on his or her individual tax return? а. b. If the partnership borrowed an additional $110,000 of recourse liabilities, how would your answer to Part a change?
William, Xavier and Zelda formed WXZ Partnership. William contributed land with a fair market value of $50,000 (basis of $10,000) in exchange for a 50% interest (capital and profits/losses). Zelda contributed services worth $30,000 in exchange for a 40% profit interest (profit interest only; no capital interest). Xavier owns the remaining interest in the partnership. What is the amount of William's recognized gain on the contribution of land in exchange for his interest in the partnership?
5. Which of the following items do not retain their character as they flow through to the partnership? More than one answer may be correct. a. Long-term capital gains. b. Short-term capital gains. c. Depreciation recapture income. d. Dividend income. 6. Sal and Nan owned 90% and 10% of the SN Partnership, respectively. SN operated a foundry. Sal sold stock in ExxonMobil with a basis of $4,000 to the partnership for $6,000. The amount and character of gain recognized to Sal is: a. $0. b. $2,000 ordinary. c. $2,000 capital gain. d. $6,000 ordinary. 7. Sal and Nan owned 90% and 10% of the SN partnership, respectively. SN operated a foundry. Sal sold a machine, capital asset to him but to be used in the SN business operations, with a basis of $4,000 to the partnership for $6,000. The amount and character of gain recognized to Sal is: a. $0. b. $2,000 ordinary. c. $2,000 capital gain. d. $6,000 ordinary.

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