Question
Allison, Keesha, and Steven each owns an equal interest in KAS Partnership, a calendar-year-end, cash-method entity. On January 1 of the current year, Steven's basis
Allison, Keesha, and Steven each owns an equal interest in KAS Partnership, a calendar-year-end, cash-method entity. On January 1 of the current year, Steven's basis in his partnership interest is $30,750. During January and February, the partnership generates $34,950 of ordinary income and $5,670 of tax-exempt income. On March 1, Steven sells his partnership interest to Juan for a cash payment of $53,250. The partnership has the following assets and no liabilities at the sale date:
Tax Basis | FMV | |
---|---|---|
Cash | $ 37,500 | $ 37,500 |
Land held for investment | 37,500 | 75,000 |
Totals | $ 75,000 | $ 112,500 |
a. Assuming KAS's operating agreement provides for an interim closing of the books when partners' interests change during the year, what is Steven's basis in his partnership interest on March 1 just prior to the sale?
Allison, Keesha, and Steven each owns an equal interest in KAS Partnership, a calendar-year-end, cash-method entity. On January 1 of the current year, Steven's basis in his partnership interest is $30,750. During January and February, the partnership generates $34,950 of ordinary income and $5,670 of tax-exempt income. On March 1, Steven sells his partnership interest to Juan for a cash payment of $53,250. The partnership has the following assets and no liabilities at the sale date:
Tax Basis | FMV | |
---|---|---|
Cash | $ 37,500 | $ 37,500 |
Land held for investment | 37,500 | 75,000 |
Totals | $ 75,000 | $ 112,500 |
a. Assuming KAS's operating agreement provides for an interim closing of the books when partners' interests change during the year, what is Steven's basis in his partnership interest on March 1 just prior to the sale?
Basis:
c. What is Juan's initial basis in the partnership interest?
Basis:
d. What is the partnership's basis in the assets following the sale?
Basis:
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