Question

A and B are equal partners in a personal services partnership. Each partner acquired her partnership interest for cash several years ago. None of the partnership’s asset sis Section 704(c) property. The partnership has the following balances sheet:

Assets				Liabilities and Partnerships' Capital
		A.B.	FMV
cash		13,000	13,000	Liabilities		2,000
capital assets				Capital	A.B.	FMV
	collectibles	1,000	3,000	A	10,000	15,000
	Other	6,000	2,000	B	10,000	15,000
Subtotal		7,000	5,000
Receivables		-	14,000
Total		20,000	32,000		20,000	32,000

A and B Basis figures represent each partner's outside basis including their share of liabilities.

Consider the tax consequences to B on her sale in each of the following alternative situations:

a). B sells her interest for $15,000 cash

b). B sells her interest for $16,000 cash and under the partnership agreement all gain from the sale of the collectibles is allocated to B

c). Same as (a), above, except that the collectibles have a basis of $3,000 and a fair market value of $1,000, and the other capital asset has a basis of $4,000 and a fair market value of $4,000.

Answer 1

solution : given that crosspiece Freight Company owns a truck that value $33,000. also provided that presently, the truck’s value is $27,000, and its expected remaining helpful life is 5 years mentioned in gi ven indormation that Rundle has the chance to get for $28,000 a replacement truck that's extraordinarily fuel economical. Fuel value for the previous truck is predicted to be $7,000 each year over fuel value for the new truck. some other given data The previous truck is bought however, in spite of being in fitness, are often sold for under $16,000. Calculating the entire relevant costs: retaining truck replacing truck cost of the new truck $- $28000 additional fuel value (5*7000) $35000 $- oppurtunity cost $16000 $- total cost $51000 $28000 final decision of retentive previous truck : the purchase value of ol;d truck and value square measure moot they are washed-up value therefore they must not be thought-about the comparision value of substitution and retentive truck square measure given higher than from the higher than table the company ought to replace the previous truck because it would value $28000 in replacement as against the value of reraining truck of $51000

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