Question

In: Accounting

A property contributed by A is subject to a recourse loan of $775,000 that is assumed...

A property contributed by A is subject to a recourse loan of $775,000 that is assumed by the partnership with a tax basis of $1,850,000 and is valued at $2,578,000. The three partners share profits and losses as follows; 45% to A, 45% to B and 10% to C. The balances of their tax basis capital accounts are: (A-$974,531), (B-$1,197,959) and (C-$398,600). Book Value Capital accounts are: (A-$1,793,700), (B-$1,793,700) and (C-$398,600). Create a schedule of the allocation of the recourse loan among each partner.

Expert Solution

Allocation of recourse loan

Given,

Amount of recourse loan - $775,000

Partners share of profits and losses- 45% to A, 45% to B and 10% to C

Tax basis capital accounts : A-$974,531, B-$1,197,959 and C-$398,600

Book value of capital accounts : A-$1,793,700, B-$1,793,700 and C-$398,60

Schedule of the allocation of the recourse loan

Particulars

Partner A

Partner B

Partner C

Tax basis capital account balance

$974,531

$1,197,959

$398,600

Allocation of recourse loan of $775,000

Partner A $775,000X(974,531/2,571,090)

Partner B $775,000X(1,197,959/2,571,090)

Partner B $775,000X(398,600/2,571,090)

$ 293,751

$361,099

$120,150

Liabilities and Partner Tax Basis

As per the provisions stated in U.S. Code § 704, a partner in a partnership may only utilize a loss allocated to that partner to the extent of the partner’s “basis” in the partnership interest. This is generally equal to the amount of cash plus the adjusted tax basis of any property contributed by the partner to the partnership.

ekkarill92 answered 5 months ago

1.A property can be purchased for $200,000 subject to an assumable loan at 8.25% (below market...

1.A property can be purchased for $200,000 subject to an assumable loan at 8.25% (below market reates) with 15 years remaining and a balance of only 120,000 (The original loan was for 165,000). You want to assume the mortgage, but need to finance $150,000 total so you must take out a second mortgage for $30,000 for 15 years at 8.75%. Alternatively, there is a comaprable property for $190,000 for which you can obtain a loan of $150,000 for 15 years...

If a taxpayer sold a car and the buyer assumed the loan on the car ,...

If a taxpayer sold a car and the buyer assumed the loan on the car , what impact would that have on the amount realized?

Portions of the genome that aren’t subject to natural selection can be assumed to evolve neutrally....

Portions of the genome that aren’t subject to natural selection can be assumed to evolve neutrally. These parts of the genome can be used to _____________. Estimate divergence time for two species (molecular clock). Find instances of epistatic conflict. Estimate the impact of parasitism on the population. Determine diversity of phenotype. A mutation results in a duplicated copy of a gene. The original gene and the duplicated version are descended from the same ancestral gene and are referred to as...

A property is subject to taxation at a rate of $2.69485 per $100 of value. If...

A property is subject to taxation at a rate of $2.69485 per $100 of value. If the property has an assessed value $275,000 the tax amount due would be? a. $74,108.38 b. $ 741.08 c. $7,410.84 d. $7,425.00 e. $7,140.84 Which of the following describes a Gross Lease? a. A lease in which the tenant pays rent plus defined operating expenses related to the property. b. An agreement in which the tenant pays a fixed amount of rent and some...

Taxpayer files bankruptcy, basis of property subject to reduction is limited to?

1. What is a partner’s or partnership’s interest in contributed property? 2.How is gain or loss...

1. What is a partner’s or partnership’s interest in contributed property? 2.How is gain or loss calculated on contributed property? 3. What are the implications of contributing property that is encumbered by a liability? 4. What are the tax consequences of contributing service rather than property?

What is the basis of the stock in the hands of the shareholder, and what is the basis of the property contributed in the hands of the corporation?

Explain the 80% rule as it pertains to the formation of a corporation. An individual contributes property with a fair market value in excess of basis to a corporation in exchange for stock. What is the basis of the stock in the hands of the shareholder, and what is the basis of the property contributed in the hands of the corporation? A corporation may make a distribution to its shareholders. Depending on the circumstances, in the hands of the...

Jim, one of two equal partners of the JJ Partnership, a general partnership, contributed business property...

Jim, one of two equal partners of the JJ Partnership, a general partnership, contributed business property with an adjusted basis to him of $15,000 and a fair market value of $10,000 to the JJ Partnership. Jim’s capital account was credited with $10,000. The property later was sold for $12,000. As a result of this sale, how much gain or loss must Jim report on his personal income tax return? a. $1,000 gain b. $1,500 loss c. $2,000 gain d. $3,000...

Luis and Jennifer formed the JL Partnership as equal partners. Each partner contributed cash and property...

Luis and Jennifer formed the JL Partnership as equal partners. Each partner contributed cash and property with a value of $80,000 for partnership operations. As a result of these contributions, Luis had a basis of $80,000 and Jennifer a basis of $60,000 in their partnership interests. At the end of their first year of operations, they had the following results: Gross sales $110,000 Cost of goods sold 75,000 Rent expense 18,000 Employees’ salaries 20,000 Utilities 3,000 Charitable contribution 500 Section...

1. On January 1, Year 1, W invested $15,000 cash and contributed property with an adjusted...

1. On January 1, Year 1, W invested $15,000 cash and contributed property with an adjusted basis of $5,000 and a fair market value of $20,000 in exchange for a 10% interest in a limited partnership. One general partner has a 50% interest. In Year 1, the partnership purchased an apartment building to rent. The purchase was financed through a nonrecourse nonconvertible debt of $160,000 to a bank. The partnership made only interest payments on the bank loan for 10...