partnership tax law

Anonymous
timer Asked: Dec 21st, 2018
account_balance_wallet $35

Question description

Partner A received the following in a nonliquidating distribution:

Basis FMV

Cash $20,000 $20,000

Inventory Item 1 $15,000 $18,000

Inventory Item 2 $12,000 $4,000

Capital Asset 1 $15,000 $8,000

Capital Asset 2 $10,000 $20,000

$72,000 $70,000

Assume A’s basis in the partnership before the distribution was $35,000. What would the bases of the assets be to A?

he ABC partnership has the following balance sheets:

Basis

FMV

Land

$30,000

$60,000

Liabilities

$0

$0

A

$10,000

$20,000

B

$10,000

$20,000

C

$10,000

$20,000

$30,000

$60,000

A sold his (1/3) interest to G for $20,000, with $15,000 payable this year and $5,000 next year. How much and what character of gain will A have to recognize in each of the two years?

Tutor Answer

Robert__F
School: UCLA

Please l

Basis
Cash
Inventory item 1
Inventory item 2
Capital asset 1
Capital asset 2
Total assets

FMV
20000
15000
12000
15000
10000
72000

20000
18000
4000
8000
20000
70000

Calculation of the percentage of A
A partner basis
35000
Partnership basis
72000
% partner A
48.61%
Assets attributable to A according to the computed percentage
Basis
FMV
Gain
Cash
$ 9,722.22 $ 9,722.22 $
Inventory item 1 $ 7,291.67 $ 8,750.00 $ 1,458.33
Inventory item 2 $ 5,833.33 $ 1,944.44 $ (3,888.89)
Capital asset 1
$ 7,291.67 $ 3,888.89 $ (3,402.78)
Capital asset 2
$ 4,861.11 $ 9,722.22 $ 4,861.11
Total assets
$ 35,000.00 $ 34,027.78 $ (972.22)

Land
Liabilities
A
B
C
Total

Basis
FMV
30000
60000
0
0
10000
20000
10000
20000
10000
20000
30000
60000

Calculation of the gain declared by A
In the current year
Cash received from G
15000
-Liability relief
0
-Basis
-10000
Gain current ye...

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Review

Anonymous
Goes above and beyond expectations !

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