1.A and B are partners of the AB partnership. A has a 40% interest and B has a 60% interest. A contributed land with a basis of $120,000 and a fair market value of $200,000 and equipment with a basis of $50,000 and a fair market value of $200,000, B contributed cash of $400,000, equipment "A" with a basis of $100,000 and a fair market value of $70,000, and other equipment "B" with a basis of $90,000, fair market value of $130,000. In addition to the items listed below, assume that the partnership sold the equipment that A contributed for $180,000 and sold the "A" equipment that B contributed for $50,000.

Sales$560,000

Cost of Sales$350,000

Capital Gains$ 25,000

Utilities, salaries, etc. $120,000

Charitable Contributions$ 23,000

AMT Depreciation Preference$ 12,000

Tax - exempt interest income$ 7,500

Guaranteed Payment to B$15,000

Which of the above items will be separately stated?

What is the partnerships income/loss from operations?

Compute each partner's 704(b) account and their tax capital account.

How much total income/loss will be allocated to A? to B?

What is the partnerships net income per books?

Reconcile net income per books to taxable income reported by all of the partners.