tax forms . Aaron, Deanne, and Keon formed the Blue Bell General Partnership at the beginning of the current year. Aaron and Deanne each contributed $110,000, and Keon transferred an acre of undeveloped land to the partnership. The land had a tax basis of $70,000 and was appraised at $180,000. The land was also encumbered with a $70,000 nonrecourse mortgage for which no one was personally liable. All three partners agreed to split profits and losses equally. At the end of the first year, Blue Bell made a $7,000 principal payment on the mortgage. For the first year of operations, the partnership records disclosed the following information: Sales revenue Cost of goods sold Operating expenses Long-term capital gains §1231 gains Charitable contributions Municipal bond interest Salary paid as a guaranteed payment to Deanne (not included in expenses) $470,000 410,000 70,000 2,400 900 300 300 3,000 a) Compute the adjusted basis of each partner's interest in the partnership immediately after the formation of the partnership. b) List the separate items of partnership income, gains, losses, and deductions that the partners must show on their individual income tax returns that include the results of the partnership's first year of operations. c) Using the information generated in answering parts (a) and (b), prepare Blue Bell's page 1 and Schedule K to be included with its Form 1065 for its first year of operations, along with Schedule K-1 for Deanne. d) What are the partners' adjusted bases in their partnership interests at the end of the first year of operations? Page 20-52
tax forms . Aaron, Deanne, and Keon formed the Blue Bell General Partnership at the beginning of the current year. Aaron and Deanne each contributed $110,000, and Keon transferred an acre of undeveloped land to the partnership. The land had a tax basis of $70,000 and was appraised at $180,000. The land was also encumbered with a $70,000 nonrecourse mortgage for which no one was personally liable. All three partners agreed to split profits and losses equally. At the end of the first year, Blue Bell made a $7,000 principal payment on the mortgage. For the first year of operations, the partnership records disclosed the following information: Sales revenue Cost of goods sold Operating expenses Long-term capital gains §1231 gains Charitable contributions Municipal bond interest Salary paid as a guaranteed payment to Deanne (not included in expenses) $470,000 410,000 70,000 2,400 900 300 300 3,000 a) Compute the adjusted basis of each partner's interest in the partnership immediately after the formation of the partnership. b) List the separate items of partnership income, gains, losses, and deductions that the partners must show on their individual income tax returns that include the results of the partnership's first year of operations. c) Using the information generated in answering parts (a) and (b), prepare Blue Bell's page 1 and Schedule K to be included with its Form 1065 for its first year of operations, along with Schedule K-1 for Deanne. d) What are the partners' adjusted bases in their partnership interests at the end of the first year of operations? Page 20-52
Chapter21: Partnerships
Section: Chapter Questions
Problem 22CE
Related questions
Question
Transcribed Image Text:tax forms
. Aaron, Deanne, and Keon formed the Blue Bell General Partnership at the beginning of the current year. Aaron and Deanne each
contributed $110,000, and Keon transferred an acre of undeveloped land to the partnership. The land had a tax basis of $70,000 and
was appraised at $180,000. The land was also encumbered with a $70,000 nonrecourse mortgage for which no one was personally
liable. All three partners agreed to split profits and losses equally. At the end of the first year, Blue Bell made a $7,000 principal
payment on the mortgage. For the first year of operations, the partnership records disclosed the following information:
Sales revenue
Cost of goods sold
Operating expenses
Long-term capital gains
§1231 gains
Charitable contributions
Municipal bond interest
Salary paid as a guaranteed payment to Deanne (not included in expenses)
$470,000
410,000
70,000
2,400
900
300
300
3,000
a) Compute the adjusted basis of each partner's interest in the partnership immediately after the formation of the partnership.
b) List the separate items of partnership income, gains, losses, and deductions that the partners must show on their individual income
tax returns that include the results of the partnership's first year of operations.
c) Using the information generated in answering parts (a) and (b), prepare Blue Bell's page 1 and Schedule K to be included with its
Form 1065 for its first year of operations, along with Schedule K-1 for Deanne.
d) What are the partners' adjusted bases in their partnership interests at the end of the first year of operations?
Page 20-52
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