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Posted on Apr 02, 2024

Aaron, Deanne, and Keon formed the Blue Bell General Partnership at the beginning of the current year. Aaron and Deanne each contributed $140,000, and

Aaron, Deanne, and Keon formed the Blue Bell General Partnership at the beginning of the current year. Aaron and Deanne each contributed $140,000, and Keon transferred an acre of undeveloped land to the partnership. The land had a tax basis of $74,500 and was appraised at $210,000. The land was also encumbered with a $74,500 nonrecourse mortgage for which no one was personally liable. All three partners agreed to split profits and losses equally. At the end of the first year, Blue Bell made a $10,000 principal payment on the mortgage. For the first year of operations, the partnership records disclosed the following information: Sales revenue Cost of goods sold Operating expenses $ 515,000 434,000 Long-term capital gains 1231 gains Charitable contributions Municipal bond interest Salary paid as a guaranteed payment to Deanne (not included in expenses) 94,000 2,850 600 300 300 3,000 Required: a. Compute the adjusted basis of each partner's interest in the partnership immediately after the formation of the partnership. b. List the separate items of partnership income, gains, losses, and deductions that the partners must show on their individual income tax returns that include the results of the partnership's first year of operations. d. What are the partners' adjusted basis in their partnership interests at the end of the first year of operations? Complete this question by entering your answers in the tabs below. Required A Required B Required D Compute the adjusted basis of each partner's interest in the partnership immediately after the formation of the partnership. Note: Do not round intermediate calculations. Round your final answers to the nearest whole dollar amount. Adjusted basis Keon Aaron Deanne

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The image youve provided appears to be a screenshot of a question regarding the Blue Bell General Partnerships financials asking to compute the adjusted basis of each partners interest in the partnership immediately after the formation of the partnership as well as separate items of partnership income gains losses and deductions and the adjusted basis of each partners interests at the end of the first year of operations Based on the information provided in the question we can proceed to answer a Compute the adjusted basis of each partners interest in the partnership immediately after the formation of the partnership We need to calculate the starting basis for each partner The starting basis for each partner is typically the sum of any money they contributed plus the market value of any property they contributed minus any liabilities that the partnership assumes that were previously the responsibility of the individual partner According to the information given Aaron contributes 140000 cash Deanne contributes land that has a tax basis of 74500 and is appraised at 210000 The land is also encumbered with a 74500 nonrecourse mortgage Because all partners agree to split profits and losses equally their liabilities are also assumed to be split equally unless otherwise defined Lets calculate For Aaron His initial basis is simply the cash he contributed since theres no associated liability transferred to the partnership Initial basis for Aaron 140000 For Deanne Deanne contributes land with a tax basis of 74500 which the partnership assumes along with its associated nonrecourse mortgage Her basis is the tax basis of the property minus her share of the mortgage that the partnership has assumed 13 of 74500 since theyre splitting everything equally Initial basis for Deanne Tax basis of land Nonrecourse mortgage 3 Initial basis for Deanne 74500 74500 3 Initial basis for Deanne 74500 2483333 Initial basis for Deanne 4966667 rounded to the nearest whole dollar For Keon There is no specific cash or property contribution mentioned for Keon in the information provided so we assume his initial basis is 0 unless there is other unmentioned information Initial basis for Keon 0 The adjusted basis for each partner right after the formation of the partnership would be Keon 0 Aaron 140000 Deanne 49667 rounded Please note there could be additional information required in practice such as Keons contributions and readings of the partnership agreement for a precise determination but this solution is based on the information provided in the image b List the separate items of partnership income gains losses and deductions that the partners ... blur-text-image