Question
Daisy Tree Partnership owns & operates 2 apartment complexes. The first complex was contributed to the partnership by partner L. The other two partners (M
Daisy Tree Partnership owns & operates 2 apartment complexes. The first complex was contributed to the partnership by partner L. The other two partners (M and N) contributed cash which, together with borrowed funds, was used to purchase the second complex. The 3 partners share partnership income, loss, gain & deduction equally. The tax basis & book value of the partnerships assets at the end of the current year are as follows: Cash and equivalents Tax $60,000.00 Book $60,000.00 Receivables Tax $- Book $45,000.00 Apartment Complex 1 Tax $600,000.00 Book $1,500,000.00 Accumulated depreciation, complex 1 Tax $(120,000.00) Book $(300,000.00) Apartment Complex 2 Tax $2,475,000.00 Book $2,475,000.00 Accumulated depreciation, complex 2 Tax $(180,000.00) Book $(180,000.00) Land & other assets Tax $200,000.00 Book $200,000.00 Total assets Tax $2,035,000.00 Book $4,070,000.00 A. Assume that the partnership uses the traditional method with curative allocations to make allocations under Code Sec. 704(c).Complex 1 has a remaining useful life of 10 years (use 10 years for book) for book & tax. Complex 2 has a remaining useful life of 27.5 years (use 27.5 years for book). Both Complex 1 & 2 are depreciated using the straight line method for both book & tax. QUESTION; tax depreciation allocated among the 704 (b) capital accounts of partners L, M, & N?
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