assignment 8

ACCT 540 Assignment 8 Mary and Todd form the MT Partnership with a transfer of the following properties: Mary $300,000 cash Todd $300,000 FMV property $200,000 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 (704b) and tax basis capital account entries for both Mary and Todd at formation of the partnership 2. Assume that Todd's property is later sold for $400,000. 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