Question
(a) Dawn, Ethan and Gary form an equal general partnership, DEG. Dawn contributes Property #1 with a fair market value of $165,000 and an adjusted
(a) Dawn, Ethan and Gary form an equal general partnership, DEG. Dawn contributes Property #1 with a fair market value of $165,000 and an adjusted basis in her hands of $90,000. Ethan and Gary each contribute $165,000 of cash to the DEG partnership. Each partners' capital account was credited for $165,000. As permitted by law, for purposes of section 704(c), the partnership elected the traditional method for Property #1.
If the DEG partnership sells Property #1 for $210,000. What would be the book gain (loss) and tax gain (loss) allocated to Dawn, Ethan and Gary as a result of the sale of Property #1?
(b) Dawn, Ethan and Gary form an equal general partnership, DEG. Ethan contributes Property #2 with a fair market value of $175,000 and an adjusted basis in his hands of $85,000. Dawn and Gary each contribute $175,000 of cash to the DEG partnership. Each partners' capital account was credited for $175,000. As permitted by law, for purposes of section 704(c), the partnership elected the traditional method for Property #2.
If the DEG partnership sells Property #2 for $139,000. What would be the book gain (loss) and tax gain (loss) allocated to Dawn, Ethan and Gary as a result of the sale of Property #2?
(c) Dawn, Ethan and Gary form an equal general partnership, DEG. Gary contributes Property #3 with a fair market value of $120,000 and an adjusted basis in his hands of $165,000. Dawn and Ethan each contribute $120,000 of cash to the DEG partnership. Each partners' capital account was credited for $120,000. As permitted by law, for purposes of section 704(c), the partnership elected the traditional method for Property #3.
If the DEG partnership sells Property #3 for $138,000. What would be the book gain (loss) and tax gain (loss) allocated to Dawn, Ethan and Gary as a result of the sale of Property #3?
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