Question

In: Accounting

A and B form the equal AB partnership. A contributes property (FMV = $200,000, basis =...

A and B form the equal AB partnership. A contributes property (FMV = $200,000, basis = $100,000) and B contributes $200,000 cash. The property is depreciated straight line over a 10 year life for both book and tax purposes. The partnership also has other property (FMV = $280,000, basis = $280,000) that is depreciated straight line over 10 years.

(1) Under Code Sec. 704(c), how much of the tax depreciation of the contributed property by A in the first year will B get?

(2) Assuming a curative allocation is made, how much will it be?

(3) If there were no other depreciable assets, what type of curative allocation could be made?

Please separate the answer.

Expert Solution

SOLUTION:-

A and B have thest ratio of 1:1

A will be located = 20,000

* A eill be located = 20,000

* B will be located = 20,000

Outer property

* A will be located = 28,000

= 14,000

* B will be located = 28,000

= 14,000

* Total of B will be = 10,000 + 14,000

= 24,000

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