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0. Johnson Partners admitted Tina Smith as an equal 25% partner at the beginning of this year. The partnership's only asset was a hotel with
0. Johnson Partners admitted Tina Smith as an equal 25% partner at the beginning of this year. The partnership's only asset was a hotel with a tax basis of $600,000 and a fair market value of $1,500,000. The hotel had 15 years remaining in its useful life when Tina joined the partnership. The partnership opted to revalue the hotel for book purposes under Code Sec. 704(b) following the admission of Tina as a new partner. a. If the partnership uses the traditional method to make allocations under Code Sec. 704(c), how will tax and book depreciation be allocated in the first year following Tina's admission to the partnership? b. Assume the partnership uses the remedial allocations method to make allocations under Code Sec. 704(c), rather than the traditional method. Further assume that the partnership depreciates the hotel over 39 years for book purposes (as if newly purchased). How will book and tax depreciation be allocated in year 16? (Recall that the hotel has 15 years remaining in its useful life for tax purposes)
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