Individual Income Taxes
43rd Edition
ISBN: 9780357109731
Author: Hoffman
Publisher: CENGAGE LEARNING - CONSIGNMENT
expand_more
expand_more
format_list_bulleted
Question
Chapter 20, Problem 55P
a.
To determine
Calculate recognized gain of Person G.
b.
To determine
Calculate Person G’s basis in the partnership interest.
c.
To determine
Calculate Person A’s recognized loss.
d.
To determine
Calculate Person A’s basis in the partnership interest.
e.
To determine
Calculate Person K’s basis in the partnership interest.
f.
To determine
Calculate Person I’s partnership basis in the property transferred by person G and Person A.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
X and Y form the XY Partnership. X has a 60 percent interest in capital, profits, and losses; Y has 40 percent. X contributes land with a fair market value of $140,000 and a mortgage balance of $20,000. He acquired the land 5 years ago for a total purchase price of $90,000. The mortgage balance, along with the land, is transferred to the partnership. Y contributes $80,000 cash. Calculate X's basis in the partnership AND Y's basis in the partnership. SHOW WORK FOR PARTIAL CREDIT.
Patel and Rao decide to form a partnership. Patel contributes $250, 000 in cash. Rao contributes buildings and equipment with a fair market value of $500,000, subject to a mortgage of $100,000, which the partnership assumes.
If the goodwill approach to partnership formation is used, Rao's initial capital balance is:
Ivana, Eric, and Jerry form a partnership to develop land into commercial offices and rent them for a profit. Ivana contributes land with a fair market value of $1,200,000 and a $600,000 basis. Eric and Jerry each contribute $600,000 of cash.
(a) Assume that Ivana is a 50% partner and that Eric and Jerry each are 25% partners. If the partnership earns $400,000 from operations in its first year and distributes the cash proportionately, does Ivana recognize any gain?
(b) Pursuant to the written partnership agreement, the partnership pays Ivana $100,000 a year for six years, regardless of its income, as a guaranteed payment for capital. Alternatively, pursuant to the partnership agreement, the partnership allocates and distributes the first $100,000 of income exclusively to Ivana for six years. Assume that the highest applicable federal rate for all years equals 8%. Does Ivana recognize any gain?
Chapter 20 Solutions
Individual Income Taxes
Ch. 20 - Prob. 1DQCh. 20 - LO.1 Sylvia and Trang want to enter into business...Ch. 20 - Prob. 3DQCh. 20 - Prob. 4DQCh. 20 - Prob. 5DQCh. 20 - LO.3, 4, 5 Contrast the income taxation of...Ch. 20 - LO.3, 8, 9 The taxpayer has generated excess...Ch. 20 - Prob. 8DQCh. 20 - Prob. 9DQCh. 20 - Prob. 10DQ
Ch. 20 - Prob. 11DQCh. 20 - Prob. 12DQCh. 20 - Prob. 13DQCh. 20 - Prob. 14DQCh. 20 - LO.5 Beige Corporation has a fiscal year ending...Ch. 20 - Prob. 16DQCh. 20 - Prob. 17DQCh. 20 - Prob. 18DQCh. 20 - Prob. 19DQCh. 20 - Prob. 20DQCh. 20 - Prob. 21DQCh. 20 - Blaine, Cassie, and Kirstin are equal partners in...Ch. 20 - LO.3 Green Corporation, a calendar year taxpayer,...Ch. 20 - Prob. 24CECh. 20 - Prob. 25CECh. 20 - LO.4 Gold and Silver are two unrelated calendar...Ch. 20 - Prob. 27CECh. 20 - Prob. 28CECh. 20 - Prob. 29CECh. 20 - Prob. 30CECh. 20 - Prob. 31CECh. 20 - Prob. 32CECh. 20 - Prob. 33CECh. 20 - LO.3, 4, 5 Using the legend provided below,...Ch. 20 - LO.3 Garnet incurs the following capital asset...Ch. 20 - Prob. 36PCh. 20 - LO.3 Taupe, a calendar year taxpayer, has a...Ch. 20 - LO.3, 8 Robin incurred the following capital...Ch. 20 - Prob. 39PCh. 20 - Prob. 40PCh. 20 - Prob. 41PCh. 20 - Prob. 42PCh. 20 - Prob. 43PCh. 20 - Prob. 44PCh. 20 - Prob. 45PCh. 20 - Prob. 46PCh. 20 - Prob. 47PCh. 20 - Prob. 48PCh. 20 - Prob. 49PCh. 20 - Prob. 50PCh. 20 - During the current year, Thrasher (a calendar...Ch. 20 - Prob. 52PCh. 20 - Prob. 53PCh. 20 - Prob. 54PCh. 20 - Prob. 55PCh. 20 - LO.9 The Pheasant Partnership reported the...Ch. 20 - Prob. 57PCh. 20 - Prob. 58PCh. 20 - Prob. 59PCh. 20 - Prob. 1RPCh. 20 - Prob. 2RPCh. 20 - Prob. 3RPCh. 20 - Prob. 5RPCh. 20 - On January 1, year 5, Olinto Corp., an accrual...Ch. 20 - Prob. 2CPACh. 20 - Prob. 3CPACh. 20 - Prob. 4CPACh. 20 - Prob. 5CPACh. 20 - Prob. 6CPACh. 20 - Prob. 7CPA
Knowledge Booster
Similar questions
- Elsa and Perla form a new partnership. Elsa invests P 300, 000 in cash for her 60% interest in the capital and profits of the business. Perla contributes land that has an original cost of P 40, 000 and a fair market value of P 70, 000 and a building that has a tax basis of P 50, 000 and a fair market value of P 90, 000. The building is subject to a P 40, 000 mortgage that the partnership will assume. What amount of cash should Perla contribute? * •110, 000 • 80, 000 O : 150, 000 O :40, 000arrow_forwardG and L form a limited partnership. L contributes $2,000, and G, who does not contribute cash, will use her immense brainpower to earn money for the partnership. The business deal is that L receives all cash distributions until L has received back the amount of her capital investment. Subsequent distributions will be split 80% to L and 20% to G. In Year 1, the partnership buys two parcels of land, Blackacre and Whiteacre, each for $1000. At year end, the partnership sells Blackacre for $1100 and distributes the entire proceeds of $100 to L.How should the $100 gain on Blackacre be allocated between L and G to be consistent with the business deal.arrow_forwardSue 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_forward
- Larry and Jessica form the L&J Partnership. Larry contributes property with an adjusted basis of $70,000, a fair market value of $200,000, and subject to a liability of $80,000 in exchange for a 40 percent interest in the partnership. Jessica receives a 60 percent interest in the partnership in exchange for services performed for the partnership, valued at $10,000, and cash of $170,000. If an amount is zero, enter "0". a. What amount of gain or loss must Larry recognize as a result of his transfer of the property to the partnership?$ b. What is Larry's basis in his partnership interest immediately after the formation of the partnership including allocation of partnership liabilities?$ c. What is the partnership's basis in the property contributed by Larry?$ d. What is Jessica's basis (after considering Larry's liability assumed by the partnership) in her partnership interest immediately after the formation of the partnership including…arrow_forwardAlly, Nicole, and Jim form a general partnership. Ally acquires a 1/3rd general partnership interest in exchange for a contribution of property with a basis of $150,000 and a fair market value of $540,000, subject to a recourse liability of $180,000. Nicole and Jim each contribute $360,000 cash in exchange for their 1/3rd general partnership interest. Assume that each partner will be allocated 1/3rd of the liability under section 752 following the contribution and the partnership’s assumption of the debt. Determine each partner’s outside basis in the partnership. Prepare the partnership’s books following formation. Assets Book Tax Liabilities Book Tax Capital Book Taxarrow_forwardOscar and Frank form an equal partnership, the O and F Partnership. Oscar contributes land with an adjusted basis of $45,000, subject to a mortgage of $100,000, in exchange for a partnership interest worth $250,000. Frank contributes cash of $100,000 and performs services for the partnership in exchange for a partnership interest worth $250,000. a. What is the amount of Oscar's recognized gain or loss (if any) as a result of the contribution to the partnership in exchange for the partnership interest? b. What is Oscar's basis in his partnership interest immediately after the contribution? c. What is the amount of Frank's recognized income or loss (if any) as a result of the receipt of the partnership interest in exchange for the cash and services? d. What is the partnership's basis in the land received from Oscar?arrow_forward
- Wreck and Ralph form a new partnership. Wreck invests P500,000 in cash. Ralph contributes land that has an original cost of P400,000 and a fair market value of P300,000, and a building that has a tax value basis of P400,000 and a fair market value of P500,000. The building is subject to a P120,000 mortgage that the partnership will assume. They agreed to have equal interest. What is the impact of the bonus method?arrow_forwardA and B form a new partnership. A invests P300,000 in cash for his 30% interest in the capital and profits of the business. B contributes cash and building with a fair market value of P600,000. The building is subject to a P40,000 mortgage that the partnership will assume. Compute the amount of cash B should contribute.arrow_forward23.Carolina and Alfonso form TikTuk general partnership. Each person receives an equal interest in the newly created partnership. Carolina contributes $15,000 of cash and land with an FMV of $60,000. Her basis in the land is $25,000. Alfonso contributes equipment with an FMV of $18,000 and a building with an FMV of $27,000. His basis in the equipment is $6,000, and his basis in the building is $12,000. How much gain must the TikTuk general partnership recognize on the transfer of these assets from Carolina and Alfonso? Explain your answerarrow_forward
- G and L form a limited partnership. G, the general partner, contributes $80,000 and L, the limited partner, contributes $320,000. The partnership purchases commercial real estate on leased land, paying $400,000 cash and borrowing $1,600,000 on a nonrecourse basis from a commercial lender. The terms of the loan require payment of interest only for the first five years. The GL partnership agreement allocates all income, gain, loss, and deductions 20% to G and 80% to L until the first time that the partnership has recognized items of income and gain that exceed the items of loss and deduction recognized over its life, and then all further partnership items are to be allocated equally between G and L. At the time the partnership agreement is entered into, there is a reasonable likelihood that, over the partnership’s life, it will recognize amounts of income and gain significantly in excess of losses and deductions. The partnership agreement requires that all allocations are to be reflected…arrow_forwardthree partners, John, Jim, and Alice form a partnership. John invests $27,500; Jim invests $10,700, and Alice invests $8,400. In addition, Jim performs specific management functions for which he is paid $2,000 from the partnership proceeds. if the partnership earns $176,000, how much will jim receive?arrow_forwardWinnie and Minnie form a partnership. Winnie contributed $5,000 cash and $20,000 in inventory. Minnie contributes $8,000 in cash and land with a current market value of $60,000. The land originally cost $30,000. Minnie also brings over a $20,000 liability to the partnership. Which of the following is correct? Select one: O a. Minnie, capital is credited for 68,000 b. Winnie, capital is debited for 25,000 c. Minnie, capital is credited for 48,000 O d. Winnie, capital is credited for $5,000arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Individual Income TaxesAccountingISBN:9780357109731Author:HoffmanPublisher:CENGAGE LEARNING - CONSIGNMENT
Individual Income Taxes
Accounting
ISBN:9780357109731
Author:Hoffman
Publisher:CENGAGE LEARNING - CONSIGNMENT