Business Finance
MC 621 Kennedy King College Partnership Tax Questions

MC 621

Kennedy King College

MC

Question Description

I’m trying to learn for my Accounting class and I’m stuck. Can you help?

This is Federal Taxation: Corporations, Partnerships class.

Please take a look at the Questions attached and answer them.

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Partnership Tax. Partnerships 1. Pete is a 1/3 partner in an LLP. Pete the following tranactions. He contributed land worth $30,000 (basis $20,000) and services worth $20,000. First year: partnership borrowed $30,000 and had undistributed income of $30,000. Second year: partnership distributed cash to Pete of $20,000 and paid off the loan. Show and explain your calculation. 2. Explain the tax consequences of four separately stated income/loss/deduction in the 1065 K-1. 3. Pam is a partner. She has a $50,000 basis in the partnership. The partnership distributes cash of $10,000, land worth $10,000 (basis $5000) and Unrealized Receivables worth $50000 (basis 0) in a proportionate non-liquidating distribution. Show and explain your calculation. 4. Give an example and explain a disproportional partnership distribution. (Hint: see example 15 in Ch. 11, but do not use that exact example as your answer.) 5. Val Vendor is selling his 1/3 partnership interest to Bea Buyer; Bea assumes his share of the partnership liabilities of $20,000 and pays Val $70,000. The partnership only owns land. Val’s basis in the partnership was $50,000 before any income allocation; During the period Val owned his interest his share of the undistributed income was $10,000. Show and explain your calculation. 6. Summarize the following cases: Dolese v Comm., 811 F.2d 543(10CA,1984) and M.J. Speisman v Comm., 260 F2d 940 (9CA,1958) 7. Summarize Revenue Ruling 2007-40. ...
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Partnership Tax. Partnerships

1. Pete is a 1/3 partner in an LLP. Pete the following transactions. He contributed land worth
$30,000 (basis $20,000) and services worth $20,000. First year: partnership borrowed $30,000
and had undistributed income of $30,000. Second year: partnership distributed cash to Pete of
$20,000 and paid off the loan. Show and explain your calculation.
Answer:
The value of the land is $30,000 & Pete’s basis for partnership interest is 1/3 ($30,000) partner in
an LLP. However adjusted basis of land worth is $10,000.
Hence when land takes over land worth as a distribution, his basis for partnership is reduced by
$20,000. Hence his revised basis for partnership interest would be $20,000 ($15,000 - $10,000).
Here is the calculation:
= $30000 – 1/3(30000)
= $30000- $10000
= $20,000
If the land worth had been worth $30,000, still revised basis for partnership interest would be
$10,000 ($20,000 - $10,000), because the gain on current distribution is calculated basis the
adjusted basis of the asset & not the Fair market Value. However, the capital account of A would
be reduced by $20,000 & $30,000 each in respective above cases.

2. Explain the tax consequences of four separately stated income/loss/deduction in the 10...

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