ACCT $540$ Assignment $8$

Mary and Todd form the MT Partnership, with a transfer of the following properties:

Mary $$2,000,000$ cash

Todd $$2,000,000$ FMV property

$$1,400,000$ tax basis

Both Mary and Todd receive a $50\%$ interest in the partnership. They have an agreement that allocates

all profits and losses $50\%$ to each member. They also have language in their partnership agreement that

satisfies the alternate test for economic effect.

REQUIRED:

$1.$ Show the book $(704$b$)$ and tax basis capital account entries for both Mary and Todd at formation

of the partnership.

$2.$ Assume that Todd$$s contributed property is later sold for $$2,800,000.$ No depreciation

deductions were claimed. Show the allocation of the book and tax gain from this sale, and

explain which one will be reflected on the tax return of the partnership.

YOU MUST SHOW CAPITAL ACCOUNTS USING THE SAME FORMAT AS I USED ON THE VIDEO