Question
9. Charlie and Lola formed the LC partnership on 12/10/X4 by each contributing $50,000. They split profits and losses equally. On 9/7/X7 LC purchased a
9. Charlie and Lola formed the LC partnership on 12/10/X4 by each contributing $50,000. They split profits and losses equally. On 9/7/X7 LC purchased a building for $60,000 cash plus a $400,000 mortgage. On 12/1/X7 when the building is still worth $460,000 and LCs only other assets are cash and $40,000 of uncollected accounts receivable with 0 basis, Charlie sold his partnership interest to JoJo for $250,000 cash.
Determine Charlies realized gain or loss and the character of his recognized gain or loss.
10. ABCD is a cash-basis partnership with four equal partners having the capital balances as shown below. ABCD gives E a 1/5 interest in the capital of the partnership as payment for services previously rendered by E to the ABCD partnership. The capital balances before admitting E are as follows:
Basis FMV
A $40,000 $200,000
B $40,000 $200,000
C $40,000 $200,000
D $40,000 $200,000
TOTAL $800,000
Determine the following:
- the amount of income and its character that E must report and his outside basis;
- A, B, C, and Ds expense and recognized gain and its character; and
- the basis and FMV of the capital accounts of A, B, C, D, and E.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-text-image.webp)
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Step: 3
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started