Mick, Tommy, and Nikki each contributed $500 cash to the MC

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- Chani contributes equipment to a partnership that she purchased 2 years ago for $10,000. The current book value is $7,500 and the market value is $9,000. At what value should the partnership record the equipment? A. $10,000 B. $9,000 C. $7,500 D. none of the abovearrow_forwardArun and Margot want to admit Tammy as a third partner for their partnership. Their capital balances prior to Tammys admission are $50,000 each. Prepare a schedule showing how the bonus should be divided among the three, assuming the profit or loss agreement will be 1:3 once Tammy has been admitted and her contribution is: A. $20,000 B. $80,000 C. $50,000. In addition, show the resulting journal entries to each of the three partners capital accounts.arrow_forwardMick, Tommy, and Nikki each contributed $500 cash to the MC partnership. The partnership used the cash to purchase land for $1,000; equipment for $300; and a vehicle for $200. Subsequently, when the land is valued $2,500, the equipment is valued at $900, and the vehicle is valued at $200, MC plans to admit Vince to the partnership as 25% partner. Vince will make a cash contribution. Assume MC elects to revalue its assets in accordance with the section 704(b) regulations. Assume the same facts as above. Soon after Vince’s contribution, the MC partnership sells the land for $3,000. What is the partnership’s book gain? What is the partnership’s tax gain? How is the partnership’s book and tax gain allocated?arrow_forward
- Sue and Andrew form SA general partnership. Each person receives an equal interest in the newly created partnership. Sue contributes $16,000 of cash and land with an FMV of $61,000. Her basis in the land is $26,000. Andrew contributes equipment with an FMV of $18,000 and a building with an FMV of $39,000. His basis in the equipment is $14,000, and his basis in the building is $26,000. How much gain must the SA general partnership recognize on the transfer of these assets from Sue and Andrew?arrow_forwardJerry and Sherry own and operate a partnership. Jerry’s capital balance is $50,000 and Sherry’s is $55,000. Jerry and Sherry decided to admit a new partner, Allison, to their partnership. By the terms of their partnership agreement, Jerry and Sherry share income/loss equally. Allison intends to contribute $40,000 cash to receive a twenty-five percent interest in the partnership Required: a. Revalue the partnership assets b. Determine the total equity of the partnership after the new partner is admitted c. Determine the new partner share of the total equity d. Determine the bonus resulting from Allison’s equity of her contribution e. Make journal entries to record Allison’s admission to the partnership. Please solve sub-part e. Show Your Work:arrow_forwardLaurel and Hardy form a 50/50 partnership (HaHa Partners) in 2018. Laurel contributes land with a fair market value of $700,000 and an adjusted basis of $500,000. The land is subject to a $250,000 mortgage which the partnership assumes. Hardy contributes $450,000 of cash. Determine Laurel’s outside basis and Hardy’s outside basis after each of them has contributed their property and cash to form the partnership.arrow_forward
- Jerry and Sherry own and operate a partnership. Jerry's capital balance is $50,000 and Sherry's is $55,000. Jerry and Sherry decided to admit a new partner, Allison, to their partnership. By the terms of their partnership agreement, Jerry and Sherry share income/ loss equally, Allison intends to contribute $40,000 to receive a Twenty-five percent interest in the partnership. Required: a. Revalue the partnership assets b. Determine the total equity of the partnership after the new partner is admitted c. Determine the new partner's share of the total equity d. Determine the bonus resulting from Allison's equity of her contribution e. Make journal entries to rccord Allison's admission to the partnershiparrow_forwardZach contributed land with an FMV of $44,000 and a basis of $23,500 to a partnership on April 5, 2014. On June 6, 2020, the partnership distributed the land to Art, a partner in the same partnership. At distribution, the land had an FMV of $48,950. Assume that both are equal partners in the partnership. Required: a. What is the effect of the distribution to Zach, if any? b. What is the effect of the distribution to Art? a. b.arrow_forwardHannah, Rose, and Rachael form an equal general partnership. Hannah and Rose each contribute $40,000 cash. Rachael contributes land with a basis of $48,000 and a fair market value of $100,000, subject to a nonrecourse liability of $60,000. Under section 752, assume that the liability will be allocated to the partners as follows: Hannah ($16,000); Rose ($16,000); and Rachael ($28,000). Prepare the partnership’s books following formation. *hint* - a partner’s tax capital account can be negative Assets Book Tax Liabilities Book Tax Capital Book Tax Determine each partner’s outside basis in the partnership.arrow_forward
- Amy and Lena are partners in a general partnership. Amy contributed a tract of land in Manhattan (FMV = $500,000; basis = $400,000) in exchange for a 2/3rd interest in the partnership. Lena contributed $250,000 cash in exchange for 1/3rd interest in the partnership. In the current year, the partnership sold Manhattan for $410,000. Assume the partnership adopted the traditional method. Assume the same facts as problem above, except: (1) the partnership uses the traditional method w/ curative allocations; and (2) the partnership sold a second tract of land, Brooklyn, for $400,000. The partnership purchased Brooklyn more than a year prior for $310,000. Determine the proper allocation of book and tax gain or loss for each partner and determine each partner’s ending capital accounts.arrow_forwardPlease help fill out the chart, and make it obviousarrow_forwardEmilio and Graciela joined together to form a partnership. Emilio contributed a patent, account receivable and $ 35,000 cash to a partnership. The patent had a book value of $ 9,000. The technology covered by the patent has significant market potential. For this reason, the patent was appraised at $ 78,000. Provide the journal entry for Emilio and Graciela Assuming that Fisher is planning to join the Emilio and Graciela’s partnership. Fisher contributed land, inventory and $ 45,000 cash to a partnership. The land has a book value of $ 150,000 and the market value of $ 175,000. The inventory had a book value of $ 65,000 and the market value of $ 27,000. The partnership had a $ 23,000 note payable owed by Fisher that was originally to purchase the land. Provide the journal entry for Fisher’s contribution to partnership. Prior to liquidation their partnership, Manning and Adamo had capital account of $ 50,000 and $ 105,000 respectively. Prior to liquidation, the partnership had no…arrow_forward