Lawyer recently received a five capital and profits interest in ABC Partnership in exchange for professional services he provided to the partnership. If ABC had paid an outsider to provide these services, the payment would have been deductible as an ordinary and necessary business expense. ABC's balance sheet at the time of the transfer of partnership interest follow. Determine the amount and character of any gain or loss Lawyer must recognize upon receipt of the interest in ABC. ASSETS: Cash Investments TOTAL ASSETS LIABILITIES AND EQUITY: Nonrecourse loan payable Partner capital TOTAL LIABILITIES AND EQUITY 4,500 capital gain No income is recognized 4,500 ordinary income 8,750 capital gain 8,750 ordinary income 100,000 75,000 175,000 85,000 90,000 175,000

Partnership(taxation) Assume that all partnership interests expressed as percentages are those percentages of both profits/losses and capital. Assume that all liabilities are recourse. a) Three individuals, C, D, and E, form CDE LLC. CDE LLC does not "check the box" to become a corporation and therefore is treated as a partnership for tax purposes. C contributes land, AB 70 FMV 100 and cash of 20. D contributes inventory (in the hands of both D and CDE), AB 50 FMV 120. E contributes services. In exchange, each partner receives a 1/3 interest in the LLC. What are the consequences to all of the parties? (b) Same as (a) except that C's land is subject to an assumable mortgage of 30 and has a FMV of 130

After the tangible assets have been adjusted to current market prices, the capital accounts of Grayson Jackson and Harry Barge have balances of $64,900 and $86,500, respectively. Lewan Gorman is to be admitted to the partnership, contributing $43,300 cash to the partnership, for which he is to receive an ownership equity of $50,500. All partners share equally in income. a.  Journalize the entry to record the admission of Gorman, who is to receive a bonus of $7,200. If an amount box does not require an entry, leave it blank.   Cash        Grayson Jackson, Capital        Harry Barge, Capital        Lewan Gorman, Capital      b.  What are the capital balances of each partner after the admission of the new partner? Partner Balance Grayson Jackson $ Harry Barge $ Lewan Gorman $

If a partnership is liquidated, how is the final allocation of business assets made to the partners? Multiple Choice According to the initial investment made by each of the partners. According to the profit and loss ratio. Equally. According to the final capital account balances.

a. What are the amount and character of Megan's recognized gain or loss? b. What is Megan's basis in the distributed assets? c. What are the amount and character of Matthew's recognized gain or loss? d. What is Matthew's basis in the distributed assets?