Question

In: Accounting

Emma and Laine form the equal EL Partnership. Emma contributes cash of $100,000. Laine contributes property...

Emma and Laine form the equal EL Partnership. Emma contributes cash of $100,000. Laine contributes property with an adjusted basis of $40,000 and a fair market value of $100,000.

If an amount is zero, enter "0".

a. How much gain, if any, must Emma and Laine recognize on the contributions?

Emma recognizes a gain of $_________ on the transfer and Laine recognizes a gain of $____________.

b. Emma's tax basis in her partnership interest is $___________. Her § 704(b) book basis is $____________.

c. Laine's tax basis in her partnership interest is $_____________. Her § 704(b) book basis is $______________.

d. The partnership will take a $___________ carryover  basis in the assets it receives.

e. How will the partnership account for the difference between the basis and value of the property transferred by Laine?

The partnership will treat the $____________ difference between the basis and fair market value of the property Laine contributed as a precontribution gain  that must be  allocated to Laine when the property is sold or as described under the Regulations if the property is depreciable.

Solutions

Expert Solution

a. How much gain, if any, must Emma and Laine recognize on the contributions?

Emma recognizes a gain of $__0_______ on the transfer and Laine recognizes a gain of $__0__________.

b. Emma's tax basis in her partnership interest is $_100,000__________. Her § 704(b) book basis is $__100,000__________.

c. Laine's tax basis in her partnership interest is $___40,000__________. Her § 704(b) book basis is $__40,000____________.

d. The partnership will take a $_____140,000______ carryover  basis in the assets it receives.

e. How will the partnership account for the difference between the basis and value of the property transferred by Laine?

The partnership will treat the $__60,000__________ difference between the basis and fair market value of the property Laine contributed as a precontribution gain  that must be  allocated to Laine when the property is sold or as described under the Regulations if the property is depreciable.


Related Solutions

Problem 21-28 (LO. 3, 8) Emma and Laine form the equal EL Partnership. Emma contributes cash...
Problem 21-28 (LO. 3, 8) Emma and Laine form the equal EL Partnership. Emma contributes cash of $100,000. Laine contributes property with an adjusted basis of $40,000 and a fair market value of $100,000. If an amount is zero, enter "0". a. How much gain, if any, must Emma and Laine recognize on the contributions? Emma recognizes a gain of $ on the transfer and Laine recognizes a gain of $. b. Emma's tax basis in her partnership interest is...
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...
A, B and C form an equal partnership. A contributes accounts receivable for services rendered (A.B.--...
A, B and C form an equal partnership. A contributes accounts receivable for services rendered (A.B.-- $0, F.M.V.-- $10,000); B, a real estate dealer, contributes lots held primarily for sale (A.B. -- $5,000, F.M.V. -- $10,000); and C, an investor, contributes land (A.B. -- $20,000, F.M.V. -- $10,000). Unless otherwise stated, the partnership is not a dealer in receivables or lad, all contributed assets have been held long-term by the partners prior to contribution, and the traditional method of allocation...
Peter contributes property to a partnership in exchange for a 30% interest in the partnership. The...
Peter contributes property to a partnership in exchange for a 30% interest in the partnership. The contributed property consists of real estate he owns worth $500,000. Peter has an adjusted basis in the real estate of $200,000 and the real estate is subject to a mortgage of $300,000. What is Peter’s basis in his partnership interest, and how much gain or loss does he recognize? a. negative basis of $10,000, and no gain is recognized.b. 0 basis and gain of...
George and James are forming GJ Partnership. George contributes $600,000 cash and James contributes non-depreciable property...
George and James are forming GJ Partnership. George contributes $600,000 cash and James contributes non-depreciable property with an adjusted basis of $400,000 and a fair market value of $750,000. The property is subject to a $150,000 liability, which is also transferred into the partnership and is shared equally by the partners for basis purposes. George and James share in all partnership profits equally except for any pre-contribution gain, which must be allocated according to the statutory rules for built-in gain...
Boswell and Johnson form a partnership on May 1, 2016. Boswell contributes cash of $51,000; Johnson...
Boswell and Johnson form a partnership on May 1, 2016. Boswell contributes cash of $51,000; Johnson conveys title to the following properties to the partnership: Book Value Fair Value Land $ 15,500 $ 29,000 Building and equipment 35,500 37,000 The partners agree to start their partnership with equal capital balances. No goodwill is to be recognized. According to the articles of partnership written by the partners, profits and losses are allocated based on the following formula: Boswell receives a compensation...
Gorman and Morton form a partnership on May 1, 2019. Gorman contributes cash of $59,000; Morton...
Gorman and Morton form a partnership on May 1, 2019. Gorman contributes cash of $59,000; Morton conveys title to the following properties to the partnership: Book Value Fair Value Equipment $ 19,500 $ 37,000 Licensing agreements 39,500 45,000 The partners agree to start their partnership with equal capital balances. No goodwill is to be recognized. According to the articles of partnership written by the partners, profits and losses are allocated based on the following formula: Gorman receives a compensation allowance...
Boswell and Johnson form a partnership on May 1, 2016. Boswell contributes cash of $53,000; Johnson...
Boswell and Johnson form a partnership on May 1, 2016. Boswell contributes cash of $53,000; Johnson conveys title to the following properties to the partnership: Book Value Fair Value Land $ 16,500 $ 31,000 Building and equipment 36,500 39,000 The partners agree to start their partnership with equal capital balances. No goodwill is to be recognized. According to the articles of partnership written by the partners, profits and losses are allocated based on the following formula: Boswell receives a compensation...
Boswell and Johnson form a partnership on May 1, 2016. Boswell contributes cash of $69,000; Johnson...
Boswell and Johnson form a partnership on May 1, 2016. Boswell contributes cash of $69,000; Johnson conveys title to the following properties to the partnership: Book Value Fair Value Land $ 24,500 $ 47,000 Building and equipment 44,500 55,000 The partners agree to start their partnership with equal capital balances. No goodwill is to be recognized. According to the articles of partnership written by the partners, profits and losses are allocated based on the following formula: Boswell receives a compensation...
Boswell and Johnson form a partnership on May 1, 2016. Boswell contributes cash of $60,000; Johnson...
Boswell and Johnson form a partnership on May 1, 2016. Boswell contributes cash of $60,000; Johnson conveys title to the following properties to the partnership: Book Value Fair Value Land $ 20,000 $ 38,000 Building and equipment 40,000 46,000 The partners agree to start their partnership with equal capital balances. No goodwill is to be recognized. According to the articles of partnership written by the partners, profits and losses are allocated based on the following formula: Boswell receives a compensation...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT