Lemon, Lime, and Orange, three cash method, calendar year individuals, form Starburst General Partnership to create fruit candies. Before forming this partnership, they each had their own sole proprietorship. The partners contribute the following property (in each case worth $100 net of liabilities) in exchange for equal 1/3 interests in the partnership's capital, profits and losses (see the table below of property contributed by each partner). The partnership assumes all liabilities encumbering the contributed assets. Assume that the partners are responsible for an equal share of the partnership's liabilities. What is the most that any specific partner recognizes on these transactions? Lemon contributes land with a fair market value of $215, which is encumbered by a recourse mortgage of $135. Lemon has held the land for several years as an investment, and his basis in the land is $50. Lemon also contributes $20 in cash. ο ο ο ο Lime contributes a building, a § 1231 asset, with a value of $130 in which Lime has an adjusted basis of $65. The building was purchased several years ago by Lime and is subject to a recourse mortgage $30. Orange contributes zero basis accounts receivable from his business worth $175 and assigns his accounts payable of $75 to the partnership. O $30 $50 $10 O $0
Lemon, Lime, and Orange, three cash method, calendar year individuals, form Starburst General Partnership to create fruit candies. Before forming this partnership, they each had their own sole proprietorship. The partners contribute the following property (in each case worth $100 net of liabilities) in exchange for equal 1/3 interests in the partnership's capital, profits and losses (see the table below of property contributed by each partner). The partnership assumes all liabilities encumbering the contributed assets. Assume that the partners are responsible for an equal share of the partnership's liabilities. What is the most that any specific partner recognizes on these transactions? Lemon contributes land with a fair market value of $215, which is encumbered by a recourse mortgage of $135. Lemon has held the land for several years as an investment, and his basis in the land is $50. Lemon also contributes $20 in cash. ο ο ο ο Lime contributes a building, a § 1231 asset, with a value of $130 in which Lime has an adjusted basis of $65. The building was purchased several years ago by Lime and is subject to a recourse mortgage $30. Orange contributes zero basis accounts receivable from his business worth $175 and assigns his accounts payable of $75 to the partnership. O $30 $50 $10 O $0
Chapter21: Partnerships
Section: Chapter Questions
Problem 2BCRQ
Related questions
Question
Transcribed Image Text:Lemon, Lime, and Orange, three cash method, calendar year individuals, form Starburst General Partnership to create fruit candies. Before forming this partnership,
they each had their own sole proprietorship. The partners contribute the following property (in each case worth $100 net of liabilities) in exchange for equal 1/3
interests in the partnership's capital, profits and losses (see the table below of property contributed by each partner). The partnership assumes all liabilities
encumbering the contributed assets. Assume that the partners are responsible for an equal share of the partnership's liabilities. What is the most that any specific
partner recognizes on these transactions?
Lemon contributes land with a fair market value of $215, which is encumbered by a recourse mortgage of $135. Lemon has held the land for several years as an
investment, and his basis in the land is $50. Lemon also contributes $20 in cash.
ο ο ο ο
Lime contributes a building, a § 1231 asset, with a value of $130 in which Lime has an adjusted basis of $65. The building was purchased several years ago by
Lime and is subject to a recourse mortgage $30.
Orange contributes zero basis accounts receivable from his business worth $175 and assigns his accounts payable of $75 to the partnership.
O $30
$50
$10
O $0
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Individual Income Taxes
Accounting
ISBN:
9780357109731
Author:
Hoffman
Publisher:
CENGAGE LEARNING - CONSIGNMENT