Principles Of Taxation For Business And Investment Planning 2020 Edition
23rd Edition
ISBN: 9781259969546
Author: Sally Jones, Shelley C. Rhoades-Catanach, Sandra R Callaghan
Publisher: McGraw-Hill Education
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Chapter 9, Problem 9IRP
To determine
Identify the issue for the situation given.
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. During the formation of Matt partnership, Tom contributed property with an adjusted
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Lexi and Allie formed a partnership. Lexi received a 30% interest in partnership capital and profits in exchange for land with a basis of $50,000 and a fair market value of $90,000. Allie received a 70% interest in partnership capital and profits in exchange for $210,000 of cash. Three years after the contribution date, the land contributed by Lexi is sold by the partnership to a third party for $120,000. How much taxable gain will Lexi recognize from the sale?
Cosmo contributed land with a fair market value of $362,500 and a tax basis of $102,000 to the Y Mountain Partnership in exchange for a 30 percent profits and capital interest in the partnership. The land is secured by a $142,000 nonrecourse liability. Other than this nonrecourse liability, Y Mountain Partnership does not have any liability. b. What is Cosmo's tax basis in his partnership interest?
Chapter 9 Solutions
Principles Of Taxation For Business And Investment Planning 2020 Edition
Ch. 9 - Prob. 1QPDCh. 9 - Prob. 2QPDCh. 9 - Prob. 3QPDCh. 9 - Prob. 4QPDCh. 9 - Prob. 5QPDCh. 9 - Prob. 6QPDCh. 9 - Prob. 7QPDCh. 9 - Prob. 8QPDCh. 9 - Prob. 9QPDCh. 9 - Explain the difference between a substituted basis...
Ch. 9 - Prob. 11QPDCh. 9 - Prob. 12QPDCh. 9 - Prob. 13QPDCh. 9 - Prob. 14QPDCh. 9 - Prob. 15QPDCh. 9 - Prob. 1APCh. 9 - Prob. 2APCh. 9 - Prob. 3APCh. 9 - Prob. 4APCh. 9 - Prob. 5APCh. 9 - Prob. 6APCh. 9 - This year, Neil Inc. exchanged a business asset...Ch. 9 - Prob. 8APCh. 9 - Prob. 9APCh. 9 - XYZ exchanged an old building for a new like-kind...Ch. 9 - Prob. 11APCh. 9 - Prob. 12APCh. 9 - Prob. 13APCh. 9 - Prob. 14APCh. 9 - Prob. 15APCh. 9 - Prob. 16APCh. 9 - Prob. 17APCh. 9 - Prob. 18APCh. 9 - Prob. 19APCh. 9 - On October 18 of last year, a flood washed away...Ch. 9 - Prob. 21APCh. 9 - Prob. 22APCh. 9 - Prob. 23APCh. 9 - Mr. ZJ owns a sole proprietorship. The business...Ch. 9 - Prob. 25APCh. 9 - Prob. 26APCh. 9 - Prob. 27APCh. 9 - Prob. 28APCh. 9 - Prob. 29APCh. 9 - Prob. 30APCh. 9 - Prob. 31APCh. 9 - Prob. 32APCh. 9 - Prob. 33APCh. 9 - Prob. 34APCh. 9 - Prob. 1IRPCh. 9 - Prob. 2IRPCh. 9 - Prob. 3IRPCh. 9 - Prob. 4IRPCh. 9 - Prob. 5IRPCh. 9 - Prob. 6IRPCh. 9 - Prob. 7IRPCh. 9 - Prob. 8IRPCh. 9 - Prob. 9IRPCh. 9 - Prob. 10IRPCh. 9 - Prob. 1RPCh. 9 - Prob. 2RPCh. 9 - Prob. 3RPCh. 9 - Prob. 1TPCCh. 9 - Prob. 2TPCCh. 9 - Prob. 3TPCCh. 9 - Croyden is a calendar year, accrual basis...
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- Cheryl and Joseph formed a partnership. Cheryl received a 50% interest in partnership capital and profits in exchange for contributing land with a basis of $140,000 and a fair market value of $300,000. Joseph received a 50% interest in partnership capital and profits in exchange for contributing $300,000 of cash. Three years after the contribution date, the land contributed by Cheryl is sold by the partnership to a third party for $380,000. How much taxable gain will Cheryl recognize from the sale? a) $40,000 b) $120,000 c) $160,000 d) $200,000 e) None of the abovearrow_forwardCosmo contributed land with a fair market value of $365,000 and a tax basis of $99,000 to the Y Mountain partnership in exchange for a 30 percent profits and capital interest in the partnership. The land is secured by $161,000 of nonrecourse debt. Other than this nonrecourse debt, Y Mountain partnership does not have any debt. a. How much gain will Cosmo recognize from the contribution? (Leave no answer blank. Enter zero if applicable.) b. What is Cosmo’s tax basis in his partnership interest?arrow_forwardGreene and Whatley formed a partnership at the beginning of the year, agreeing to share capital and profits equally. Greene contributed $50,000 cash. Whatley contributed land with an adjusted basis to him of $20,000 and a fair market value of $54,000 at the time of contribution. The land is subject to a $8,000 mortgage, which is assumed by the partnership. Whatley's tax basis in the partnership after the contribution is A. $12,000 B. $16,000 C. $50,000 D. None of these E. $20,000arrow_forward
- William, Xavier and Zelda formed WXZ Partnership. William contributed land with a fair market value of $50,000 (basis of $10,000) in exchange for a 50% interest (capital and profits/losses). Zelda contributed services worth $30,000 in exchange for a 40% profit interest (profit interest only; no capital interest). Xavier owns the remaining interest in the partnership. What is the amount of William's recognized gain on the contribution of land in exchange for his interest in the partnership?arrow_forwardJohn and Bjorn are partners in a newly formed partnership. John is in a higher tax bracket than Bjorn. The partnership purchases a piece of equipment for $1,000; the equipment is depreciable on a straight-line basis over five years. The partners agree to allocate all the depreciation deductions to John and gain on sale of the equipment up to $1,000 to John; any gain in excess of $1,000 will be shared between the partners. Assume that the allocations have economic effect and that the partners expect to sell the equipment for at least $1,000 in five years. Is the economic effect of the allocations substantial?arrow_forwardAaron, Deanne, and Keon formed the Blue Bell General Partnership at the beginning of the current year. Aaron and Deanne each contributed $108,000 and Keon transferred an acre of undeveloped land to the partnership. The land had a tax basis of $72,000 and was appraised at $180,000. The land was also encumbered with a $72,000 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 $6,300 principal payment on the mortgage. For the first year of operations, the partnership records disclosed the following information: Sales revenue $ 470,000 Cost of goods sold 450,000 Operating expenses 55,000 Long-term capital gains 2,100 §1231 gains 900 Charitable contributions 300 Municipal bond interest 300 Salary paid as a guaranteed payment to Deanne (not included in expenses) 3,000 a. Compute the adjusted basis of each partner’s interest in the partnership…arrow_forward
- Aaron, Deanne, and Keon formed the Blue Bell General Partnership at the beginning of the current year. Aaron and Deanne each contributed $108,000 and Keon transferred an acre of undeveloped land to the partnership. The land had a tax basis of $72,000 and was appraised at $180,000. The land was also encumbered with a $72,000 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 $6,300 principal payment on the mortgage. For the first year of operations, the partnership records disclosed the following information: Sales revenue $ 470,000 Cost of goods sold 450,000 Operating expenses 55,000 Long-term capital gains 2,100 §1231 gains 900 Charitable contributions 300 Municipal bond interest 300 Salary paid as a guaranteed payment to Deanne (not included in expenses) 3,000 Compute the adjusted basis of each partner’s interest in the partnership…arrow_forwardCosmo contributed land with a fair market value of $470,000 and a tax basis of $115,300 to the Y Mountain partnership in exchange for a 35 percent profits and capital interest in the partnership. The land is secured by $145,000 of nonrecourse debt. Other than this nonrecourse debt, Y Mountain partnership does not have any debt. (Leave no answer blank. Enter zero if applicable.) a. How much gain will Cosmo recognize from the contribution? Gain recognizedarrow_forwardZoey contributed land with a tax basis of $45,000 and a fair market value of $100,000 in exchange for a 20% percent interest in the new formed ZAT Partnership. All other partners contributed cash and ZAT partnership has no liabilities. What is Zoey’s basis in her partnership interest in ZAT Partnership?arrow_forward
- Cosmo contributed land with a fair market value of $470,000 and a tax basis of $115,300 to the Y Mountain partnership in exchange for a 35 percent profits and capital interest in the partnership. The land is secured by $145,000 of nonrecourse debt. Other than this nonrecourse debt, Y Mountain partnership does not have any debt. (Leave no answer blank. Enter zero if applicable.) b. What is Cosmo’s tax basis in his partnership interest? Tax basisarrow_forwardCosmo contributed land with a fair market value of $387,500 and a tax basis of $94,500 to the Y Mountain partnership in exchange for a 25 percent profits and capital interest in the partnership. The land is secured by a $133,000 nonrecourse liability. Other than this nonrecourse liability, Y Mountain partnership does not have any liability. (Leave no answer blank. Enter zero if applicable.) b. What is Cosmo's tax basis in his partnership interest? Tax basisarrow_forwardThe CJ Partnership has two equal partners, Cory and Jack. In the current year, the partnership earns $300,000 of ordinary income (all business) and recognizes a $16,000 long-term capital gain. Cory is married, files a joint return, and claims a standard deduction. Other than partnership items, Cory has only a $6,400 short-term capital loss at the individual level. What is Cory's taxable income?arrow_forward
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