ACCT 540

Partnership Formations Problem

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

Mary$400,000 cash

Todd$400,000 FMV property

$300,000 tax basis

Mary will receive 50% and Todd 50% of the partnership interests.

Complete the following

MaryTodd

Realized gain________________

Recognized gain_________________

Basis of Interest __________________

MT basis in contributed asset___________________

VARIATION 1:return to original facts (same basis).Todd's property is valued at $600,000 but is contributed subject to a $200,000 liability.You should assume that based on the partnership debt sharing rules the debt is shares 50% by each member.

Complete the following

MaryTodd

Realized gain________________

Recognized gain_________________

Basis of Interest__________________

MT basis in contributed asset___________________

VARIATION 2:Same as Variation 1 (same basis) except Todd's property is valued at $800,000 and is contributed subject to a liability of $400,000. You should assume that based on the partnership debt sharing rules the debt is shares 50% by each member.

Complete the following

MaryTodd

Realized gain________________

Recognized gain_________________

Basis of Interest __________________

MT basis in contributed asset___________________