Question

In: Accounting

33. The ABCD partnership has four partners. Each partner’s adjusted basis in the partnership interest owned...

33. The ABCD partnership has four partners. Each partner’s adjusted basis in the partnership interest owned by that partner was $40,000 on the first day of last year. The partnership reported net income for last year of $80,000 (there were no separately stated items to take into account). The partnership distributed pro rata to each partner $55,000 in cash plus identical parcels of land that each had a fair market value of $25,000 and a basis to the partnership of $10,000. What is each partner’s adjusted basis in the land distributed to the partner?

a. 0

b. $20,000

c. $15,000

d. $10,000

e.   $5,000

Solutions

Expert Solution

Correct answer is E

--------------------------------------------------------------------------------------------------------------------------

Adjusted basis in partnership = $40,000

Cash received = $55,000

Balance = (55000 – 40000) = $15,000 Gain

Land received = $10,000

Includable income in each partner's gross income = $15,000 - $10,000 = $5,000                                                                                          

--------------------------------------------------------------------------------------------------------------------------

Feel free to comment if you need further assistance J

Pls rate this answer if you found it useful.

ekkarill92 answered 1 year ago
Next > < Previous

Related Solutions

Partners in the ABCD Partnership decided to dissolve their partnership. On that date, the partners had...
Partners in the ABCD Partnership decided to dissolve their partnership. On that date, the partners had the following pre-liquidation capital balances: Partner A $28,000 Partner B 41,000 Partner C 18,000 Partner D 12,000 A, B, C, and D share residual profits and losses in a 4:3:2:1 ratio. Liabilities at the date of dissolution total $100,000, and noncash assets equal $105,000. During the first month of liquidation, assets having a book value of $55,000 were sold for $31,000. During the second...
Partners A, B, C and D each contribute $100,000 for 25% of the ABCD partnership.   The...
Partners A, B, C and D each contribute $100,000 for 25% of the ABCD partnership.   The partners all meet the three tests for economic effect, and the four tests for allocation of nonrecourse deductions are met as well.   They use the $400,000 cash and $3,600,000 of nonrecourse financing to buy a building that is depreciable over 20 years on a straight line basis.   Income equals expenses in all years, except for depreciation, which is allocated completely to D.   How much...
Partnership BPE's profits and losses are shared equally among the three partners. The adjusted basis of...
Partnership BPE's profits and losses are shared equally among the three partners. The adjusted basis of Partner E's interest in the partnership on January 1, 2019 was $65,000. On January 3, 2019, Partner E withdrew $16,000 in cash. The partnership reported $165,000 as ordinary income on its 2019 partnership return. In addition, $6,000 for qualified travel, meal, and entertainment expenses was shown on E's Schedule K-1 of Form 1065. Due to the 50% limitation, $3,000 of the $6,000 is unallowable...
You are an accountant at a partnership. The partnership has four partners, and, according to the...
You are an accountant at a partnership. The partnership has four partners, and, according to the partnership agreement, all have an equal stake in the company. This partnership was approached by a corporation that would like to acquire them by a stock acquisition. The partnership has no authorized stock, and the corporation does not want to pay cash for the partnership. The partnership is valued at $4,000,000 today. Reading the partnership agreement, you find that the partnership can be terminated...
Josh has a 25% capital and profits interest in the calendar-year GDJ Partnership. His adjusted basis...
Josh has a 25% capital and profits interest in the calendar-year GDJ Partnership. His adjusted basis for his partnership interest on October 15 of the current year is $300,000. On that date, the partnership makes a proportionate liquidating distribution of the following assets to Josh. Partnership’s Basis in Asset Asset’s Fair Market Value Cash Inventory $ 70,000 120,000 $ 70,000 150,000 a. Determine Josh’s basis in the inventory and his recognized gain or loss on the liquidating distribution, if any....
The ABC partnership has three partners, A, B, and C, who each has an equal interest...
The ABC partnership has three partners, A, B, and C, who each has an equal interest in partnership capital, profits, and losses. To pay off expenses incurred by the partnership, C contributed additional capital on October 31 of the current year. As a result of C's contribution, the partners' interests in the partnership capital, profits, and losses changed to 25% for A, 25% for B, and 50% for C. The partnership is an accrual method, calendar year taxpayer. a) If...
The Monroe Partnership has two partners – Amy and Claire. Each partner has a 50% interest...
The Monroe Partnership has two partners – Amy and Claire. Each partner has a 50% interest in the partnership. Amy also owns 80% of the stock (80 shares) of the Zena Corporation. The other 20% (20 shares) of Zena are owned by Wendy who is not related to Amy or Claire. Based on these facts, the Monroe partnership will be deemed to own _____________ shares of Zena and Claire will be deemed to own ___________ shares of Zena. a. 80...
The AC Partnership has two partners - Amanda and Cheryl. Each partner has a 50% interest...
The AC Partnership has two partners - Amanda and Cheryl. Each partner has a 50% interest in the partnership. Amanda also owns 80% (80 shares) of the ZZZ Corporation. The other 20% of ZZZ are owned by Wendy who is not related to Amanda or Cheryl. Based on these facts, the AC partnership will be deemed to own ______ shares of ZZZ and Cheryl will be deemed to own _____ shares of ZZZ. a. 80 shares, 80 shares b. 20...
Karli owns a 25% capital and profits interest in the calendar-year KJDV Partnership. Her adjusted basis...
Karli owns a 25% capital and profits interest in the calendar-year KJDV Partnership. Her adjusted basis for her partnership interest on July 1 of the current year is $200,000. On that date, she receives a proportionate current (nonliquidating) distribution of the following assets.     Partnership’s Basis FMV Cash            $150,000 $150,000 Inventory                30,000 60,000 Land (held for investment)                70,000 100,000          a. Calculate Karli’s recognized gain or loss on the distribution, if any.          b. Calculate Karli’s basis...
Karli owns a 25% capital and profits interest in the calendar-year KJDV Partnership. Her adjusted basis...
Karli owns a 25% capital and profits interest in the calendar-year KJDV Partnership. Her adjusted basis for her partnership interest on July 1 of the current year is $200,000. On that date, she receives a proportionate current (nonliquidating) distribution of the following assets.     Partnership’s Basis FMV Cash            $150,000 $150,000 Inventory                30,000 60,000 Land (held for investment)                70,000 100,000          a. Calculate Karli’s recognized gain or loss on the distribution, if any.          b. Calculate Karli’s basis...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT